PCAOB Stated that AS5 is principles-based. It is intended to increase the possibility that material flaws in internal control will be found before they result in material misstatement of a company’s financial statements, while eliminating actions that are unnecessary. According to Mark Olson, PCAOB Chairman, the standard 5 was made to better meet the needs of investors, public companies and auditors. AS5 was also designed to simplify compliance requirements. As a result, many finance experts expect AS5 to lessen the costs for Sarbanes-Oxley (SOX) 404 compliance. AS5 encourages a top-down, risk-based method while evaluating internal controls of an enterprise - excluding several strict requirements in AS2 that drove obsessive auditing. Most financial executives see the new standard leading to fewer specifications and more work in recognizing areas where a company’s risks of financial misstatement are greater. For example, for auditors and management, it means getting away from recording and testing most of the controls and concentrating instead on the risk -prone areas. The PCAOB and the SEC had good purposes in developing AS5: more flexibility, more discretion, less cost and the ability for smaller public
PCAOB Stated that AS5 is principles-based. It is intended to increase the possibility that material flaws in internal control will be found before they result in material misstatement of a company’s financial statements, while eliminating actions that are unnecessary. According to Mark Olson, PCAOB Chairman, the standard 5 was made to better meet the needs of investors, public companies and auditors. AS5 was also designed to simplify compliance requirements. As a result, many finance experts expect AS5 to lessen the costs for Sarbanes-Oxley (SOX) 404 compliance. AS5 encourages a top-down, risk-based method while evaluating internal controls of an enterprise - excluding several strict requirements in AS2 that drove obsessive auditing. Most financial executives see the new standard leading to fewer specifications and more work in recognizing areas where a company’s risks of financial misstatement are greater. For example, for auditors and management, it means getting away from recording and testing most of the controls and concentrating instead on the risk -prone areas. The PCAOB and the SEC had good purposes in developing AS5: more flexibility, more discretion, less cost and the ability for smaller public