Washington, D.C., Aug. 5, 2010
The Public Company Accounting Oversight Board today adopted a suite of eight auditing standards related to the auditor's assessment of, and response to, risk in an audit.
The suite of risk assessment standards, Auditing Standards No. 8 through No. 15, sets forth requirements that enhance the effectiveness of the auditor's assessment of, and response to, the risks of material misstatement in the financial statements.
The risk assessment standards address audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results.
"These new standards are a significant step in promoting sophisticated risk assessment in audits and minimizing the risk that the auditor will fail to detect material misstatements," said PCAOB Acting Chairman Daniel L. Goelzer. "Identifying risks, and properly planning and performing the audit to address those risks, is essential to promoting investor confidence in audited financial statements."
The PCAOB initially proposed a suite of standards on Oct. 21, 2008. Changes were made in response to comments received and the PCAOB reproposed the standards on Dec. 17, 2009.
These standards supersede six PCAOB interim standards and related amendments: AU sec. 311, Planning and Supervision; AU sec. 312,Audit Risk and Materiality in Conducting an Audit; AU sec. 313, Substantive Tests Prior to the Balance Sheet Date; AU sec. 319,Consideration of Internal Control in a Financial Statement Audit; AU sec. 326, Evidential Matter; and AU sec. 431, Adequacy of Disclosure in Financial Statements.
The standards, if approved by the Securities and Exchange Commission, will become effective for audits of fiscal periods beginning on or after Dec. 15, 2010.
The attachment describes each of the eight standards.
Auditing Standards Related to the Auditor's Assessment of, and Response to, Risk (AS No. 8 through 15)