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August 5, 2010

PCAOB adopts risk auditing standards

The US Public Company Accounting Oversight Board (PCAOB) has adopted a suite of eight auditing standards related to the auditor’s assessment of risk during an audit.

The suite of risk assessment standards aim to enhance the effectiveness of the auditor’s assessment of, and response to, the risks of material misstatement in the financial statements.

The new standards, initially proposed in October 2008, address audit procedures performed throughout the audit, from the initial planning stages through to the evaluation of the audit results.

“These new standards are a significant step in promoting sophisticated risk assessment in audits and minimising the risk that the auditor will fail to detect material misstatements,” PCAOB acting chairman Daniel Goelzer said.

“Identifying risks and properly planning and performing the audit to address those risks, is essential to promoting investor confidence in audited financial statements.”

The standards, which are subject to approval by the US Securities and Exchange Commission, will become effective for audits of fiscal periods beginning on or after 15 December 2010.

 

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