PCAOB addresses consistency and US GAAP hierarchy

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30 Jan 2008

The US Public Company Accounting Oversight Board (PCAOB) has adopted Auditing Standard 6 Evaluating Consistency of Financial Statements and consequential amendments to other PCAOB auditing standards.

The PCAOB adopted AS 6 in light of the FASB's issuance of SFAS 154 Accounting Changes and Error Corrections and impending issuance of SFAS The Hierarchy of Generally Accepted Accounting Principles. AS 6 updates the auditor's responsibilities to evaluate and report on the consistency of a company's financial statements and aligns those responsibilities with SFAS 154. AS 6 also requires an auditor's report to indicate whether an adjustment to previously issued financial statements results from a change in accounting principle or the correction of a misstatement. The PCAOB also removed the hierarchy of GAAP from its auditing standards. The GAAP hierarchy identifies the sources of accounting principles and the framework for selecting principles to be used in preparing financial statements. The PCAOB believes that the GAAP hierarchy is more appropriately located in the accounting standards.


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