[The following note became effective February 6, 2006, and was amended as a result of the adoption of Auditing Standard No. 5, effective for audits of fiscal years ending on or after November 15, 2007. See PCAOB Release 2007-005A.

Return to the current version.]

Note:   When a material weakness has a pervasive effect on the company's internal control over financial reporting, identifying the related control objectives that are not being achieved may be difficult because of the large number of control objectives affected.  A material weakness related to an ineffective control environment would be an example of this circumstance.  If management and the auditor have difficulty identifying all of the stated control objectives affected by a material weakness, the material weakness probably is not suitable for this engagement and should be addressed, instead, through the auditor's annual audit of internal control over financial reporting conducted under Auditing Standard No. 2.