Document ID: SEC-2007-0846-0001
Agency: sec
Document Type: Notice
Title: Public Company Accounting Oversight Board: Auditing Standard No. 5; internal control over financial reporting integrated with financial statements audit; proposed filing
Posted Date: 2007-06-20T04:00Z

[Federal Register: June 20, 2007 (Volume 72, Number 118)]
[Notices]               
[Page 34052-34053]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jn07-157]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55912; File No. PCAOB-2007-02]

 
Public Company Accounting Oversight Board; Notice of Additional 
Solicitation of Comments on the Filing of Proposed Rule on 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

June 15, 2007.
    On June 12, 2007, the Commission published notice, pursuant to 
Section 107(b) of the Sarbanes-Oxley Act of 2002 (the ``Act''), that on 
May 25, 2007, the Public Company Accounting Oversight Board (the 
``Board'' or the ``PCAOB'') filed with the Securities and Exchange 
Commission (the ``Commission'' or ``SEC'') the proposed rules relating 
to Auditing Standard No. 5 (``AS5''), An Audit of Internal Control Over 
Financial Reporting That is Integrated with an Audit of Financial 
Statements; a Related Independence Rule; and conforming amendments to 
the PCAOB's auditing standards.\1\ The Commission published notice of 
these proposed rules to solicit comments on the proposed rules from 
interested persons. As stated in that notice, interested persons are 
invited to submit written data, views and arguments concerning the 
foregoing, including whether the proposed rules are consistent with the 
Act. The Commission is publishing this additional solicitation of 
comment to request specific comment on the following:
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    \1\ See Exchange Act Release No. 34-55876 (June 7, 2007), 72 FR 
32340 (June 12, 2007).
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    (1) Is the standard of materiality appropriately defined throughout 
AS5 to provide sufficient guidance to auditors? For example, is 
materiality appropriately incorporated into the guidance regarding the 
matters to be considered in planning an audit and the identification of 
significant accounts?
    (2) Please comment on the requirement in Paragraph 80 that the 
auditor consider whether there are any deficiencies or combinations of 
deficiencies that are significant deficiencies and, if so, communicate 
those to the audit committee. Specifically, will the communication 
requirement regarding significant deficiencies divert auditors' 
attention away from material weaknesses?
    (3) Is AS5 sufficiently clear that for purposes of evaluating 
identified

[[Page 34053]]

deficiencies, multiple control deficiencies should only be looked at in 
combination if they are related to one another?
    (4) Please comment on whether the definition of ``material 
weakness'' in Paragraph A7 (which is consistent with the definition 
that the SEC adopted) appropriately describes the deficiencies that 
should prevent the auditor from finding that ICFR is effective.
    (5) Is AS5 sufficiently clear about the extent to which auditors 
can use the work of others?
    (6) Will AS5 reduce expected audit costs under Section 404, 
particularly for smaller public companies, to result in cost-effective, 
integrated audits?
    (7) Does AS5 inappropriately discourage or restrict auditors from 
scaling audits, particularly for smaller public companies?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form(http://www.sec.gov.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number PCAOB-2007-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. PCAOB-2007-02. This file 
number should be included on the subject line if e-mail is used. To 
help process and review your comments more efficiently, please use only 
one method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/pcaob). Copies of the 

submission, all subsequent amendments, all written statements with 
respect to the proposed rule that are filed with the Commission, and 
all written communications relating to the proposed rule change between 
the Commission and any person, other than those that may be withheld 
from the public in accordance with the provisions of 5 U.S.C. 552, will 
be available for inspection and copying in the Commission's Public 
Reference Section, 100 F Street, NE., Washington, DC 20549. All 
comments received will be posted without change; we do not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number PCAOB-2007-02. Comments should 
be submitted on or before July 12, 2007. The Commission intends to act 
on the proposed rule no later than July 27, 2007.

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-11935 Filed 6-19-07; 8:45 am]

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