PCAOB plan for 2006 audit firm inspections

  • PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

02 May 2006

The US Public Company Accounting Oversight Board has released a statement regarding its approach to inspections of the independent auditing firms' audits of internal control over financial reporting.

Those inspections will begin this month. The PCAOB said its inspectors will evaluate:
  • the degree to which the audit of internal control over financial reporting and the audit of financial statements were performed as a single, integrated and mutually reinforcing process;
  • whether auditors use a top-down approach in which company-level controls were identified as the first step in planning the audit;
  • whether auditors properly assessed risk and used a risk-based approach to determine the nature, timing, and extent of internal control testing; and
  • whether auditors took full advantage of the opportunities available to use the work of others, such as the company's internal audit staff.
The 2006 inspections will include the annual inspections of the nine firms – eight US and one Canadian – that audit more than 100 public companies. In addition, the PCAOB will continue its three-year cycle of inspections of smaller firms that audit at least one public company, including non-US firms. In 2005, the PCAOB inspected 281 firms, including 16 non-US firms. Click for:

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