Standards
Auditing Standard No. 2 - An Audit of Internal Control Over Financial Reporting Performed in Conjunction With An Audit of Financial Statements
Auditing Standard No. 5 - An Audit of Internal Control Over Financial Reporting That is Integrated With an Audit of Financial Statements and related Independence Rule and Conforming Amendments PCAOB Rulemaking Docket
Part 1
Standard 5 has adopted the same definitions for significant deficiencies and material weakness that the Securities Exchange Commission (SEC) uses. Significant deficiency is defined as “a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.” Material weakness if defined as “a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.” (SEC)
The direction on using the work of others in an audit of internal control from Standard 2 has been replaced in Standard 5. The auditor may use competent and objective work of others in an integrated audit to obtain evidence supporting the auditor’s assessment of control risk for purpose of the audit of financial statements. Although the use of the work of other’s will more limited as risk increases. (RIAG)
When a company has multiple locations or business units, the auditor should identify significant accounts and disclosures and their relevant assertions based on the consolidated ...