AUDITING - US Chamber of Commerce

Auditing: A Profession at Risk14Enterprises need a chance to beheard before indictments are handeddown — including an opportunityto object to the appropriateness of athreatened indictment in light of therespective roles of individuals versusthe institution.CLARIFY PCAOB STANDARDSAuditing Standard #2, the primaryimplementing standard for Section 404of Sarbanes-Oxley, is a large, expansive,principles-based document. While itprovides a great deal of room for auditorsto exercise judgment and to determinethe meaning of words like “significant”and “relevant,” it doesn’t provide muchguidance as to when “enough is enough”with respect to the auditing of internalcontrols. Auditors must be allowed toexercise professional judgment, but thelack of specific guidance subjects themto substantial second guessing — by theplaintiffs’ bar, the inspection staff of thePCAOB, and others — that their auditsdid not go far enough.Senior PCAOB officials have stated thatthey can’t identify overauditing. If theprimary regulator doesn’t know the outerlimits of the standards, then how canaudit firms or their clients be expectedto? The PCAOB’s own inspection process— without a standard for determiningexcessive auditing — encourages auditors,