PCAOB Adopts New Auditing Standards to Be Effective from December 15 This Year
PCAOB (The Public Company Accounting Oversight Board) today adopted eight new auditing standards related to risk assessment. The new auditing standards are going to affect the auditors’ assessment of, and response to, risk in an audit.
The suite of new standards, which have been set forth in the Auditing Standards No. 8 through No. 15, is going to improve the assessment of the auditors’ evaluation of the risk of material misstatement in financial statements.
These new auditing standards are going to have an affect on the procedures that occur throughout the audit process and will include everything from the planning stage to evaluation done in the final auditing. The new standards apply only to financial statements of companies for material misstatement.
The PCAOB Acting Chairman Daniel L. Goelzer said that these new standards are a very important step to promote sophisticated risk assessment in audit. He also said that the standards are going to minimize the risk of the auditors failing to detect material misstatements.
The new standards have been adopted to increase investor confidence in financial statements that have been audited and are aimed at improving the identification of risks and conducting the audit in a way as to address those risks.
It was way back in October 21, 2008 that PCAOB initially proposed a new suite of auditing standards and certain changes were made according to the comments received thereafter. On December 17, 2009, PCAOB re- proposed its standards once again.
The new standards have to be approved by the Securities and Exchange Commission to become effective and if it does, all audits for the fiscal period on or after Dec. 15, 2010 will be according to the new guidelines.