The Public Company Accounting Oversight Board has proposed a
new auditing standard covering confirmation procedures, with
more of a focus on obtaining audit evidence from independent
third parties.
The proposed standard would strengthen the requirements
under the current auditing standard, AU sec. 330, "The
Confirmation Process," which it would replace.
"The proposal would modernize the confirmation standard and
strengthen its requirements to better protect investors,"
said PCAOB acting chairman Daniel L. Goelzer in a statement.
"The proposed new standard would also more explicitly
incorporate consideration of the risk of material
misstatement due to error or fraud into the selection,
design, and performance of confirmation procedures."
On April 14, 2009, the PCAOB issued a concept release on
possible revisions to the confirmation standard, which was
written in the early 1990s. The PCAOB received 24 comment
letters on the concept release. In addition, revising the
existing confirmation standard has been discussed with the
PCAOB Standing Advisory Group.
"The proposed standard recognizes the importance of audit
evidence obtained from independent third parties and, in
doing so, strengthens and extends the requirements for using
confirmations in the audit process," said PCAOB chief
auditor and director of professional standards Martin F.
Baumann.
Comments are due Sept. 13, 2010. Any new auditing standard
that is adopted by the PCAOB will be submitted to the
Securities and Exchange Commission for approval.
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