At a time when public company preparers and audit committees are sorely in need of more guidance regarding how the Public Company Accounting Oversight Board interprets its Auditing Standard No. 5, Internal Controls over Financial Reporting (“ICFR”), the only guidance the PCAOB has to offer corporate America is, “talk to your auditors.” This is hardly a satisfactory response, given the tension that exists between auditors and their clients over what is required by the PCAOB to be ICFR-compliant. The PCAOB’s approach has made it difficult for the audit firms to get management buy-in to the PCAOB’s rigorous expectations for ICFR, mainly because management has not heard the PCAOB’s expectations directly from the PCAOB.
