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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, 2007, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

PCAOB Chairman Olson: Auditing Standard 2 Changes Soon
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Posted by: Jack Ciesielski 11/20/2006 7:51 AM
Last week, PCAOB Chairman Mark Olson spoke at a Financial Executives Institute Conference on financial reporting. He gave auditors something to anticipate next month (besides their last chance to rest up before audit season): he stated that the revised Auditing Standard 2 will be released for public comment soon. And he mentioned that:

"While the PCAOB has been working on amendments to AS2, the SEC has been developing risk-based management guidance for implementing Section 404. The SEC recently announced that it will hold an open meeting on December 13th to consider recommendations regarding Section 404. Because there is great deal of value in these two initiatives being available for public consideration concurrently, the PCAOB is coordinating its release of amendments to AS2 with the SEC so that the comment periods for the PCAOB's revised AS2 and the SEC's management guidance have sufficient overlap."

So look for the AS2 exposure draft to be synchronous with the SEC guidance efforts. Will this quell the hysteria over the costs of SOX 404? Not likely. What it represents, however, is the real-world effort to move farther down the experience curve of a new process. It cannot be denied that the initial implementation of SOX 404 and the reinvigoration of the audit profession was a gut-wrenching experience for all. Nor can it be denied that it has produced favorable investor results; and it can't be denied that the entire process can be improved. This is evidence of the improvement efforts. Hopefully, it gets the chance to work.
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