Accounting experts aren’t rushing to judgment that Auditing Standard No. 5 will result in an overnight reversal of excessive auditing—primarily because the new rule has no influence over escalating auditor liability concerns—but they are optimistic that it will steer auditors in a new direction.
The Public Company Accounting Oversight Board approved AS5 late last month to replace Auditing Standard No. 2, which governed the audit of internal control over financial reporting and was a linchpin for Sarbanes-Oxley compliance. The new standard directs auditors to take a top-down, risk-based approach to the audit and eliminates many of the prescriptive requirements in AS2 that drove overzealous auditing.
