Auditing Standard 5 – What If Your Auditor Says No?
One of the ironies of all the talk about Auditing Standard 5 is that it is a standard for auditors, but the auditors are pretty quiet about it.
From PwC’s website:
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No matches were found containing Auditing Standard 5. Please perform a new search.
Deloitte has only one result from a search of the same term on their site that is post-January 2007. Unfortunately it is a letter to the SEC from 2005 talking about results so far with implementing AS2. So much for timely communication to their clients.
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And finally KPMG:
A search of their site comes up with only a discussion of the proposed standard, dated June 5, 2007. An interesting comment at the very end:
“Auditors who do not elect to comply with Auditing Standard No. 5 before the effective date must continue to comply with Auditing Standard No. 2 until it is superseded. Those auditors should, however, apply the definition of “material weakness” contained in the new standard, rather than the one contained in Auditing Standard No. 2. The SEC has adopted a rule to define the term “material weakness,” and the definition in the new standard parallels the new SEC definition.”
So now I know why “Auditing Standard 5” or one of its variations is still the #1 search term bringing readers to this blog. When someone Googles “auditing standard 5,” this blog and my posts on the subject come up at the top. It took me a lot of sleepless nights to get that position but it’s not because I’m sleeping with the Google guy. If I were a marketing communications person at a Big 4 firm (Oh, God! I’ve got to have a tequila to erase that image…) I would not want someone finding my site instead of theirs when looking for insight on these topics.
But they Big 4 partners weren’t at Compliance Week on a panel discussing these topics with all the Chief Audit and Chief Compliance Executives that attended. Scaredy cats…
Companies are very hungry for information about how to implement, how to save time on Sarbanes-Oxley implementations, how to reduce fees to their auditors and outside consultants with regard to SOX and what they can do to get a better result from the process. Unfortunately, their auditors are not telling them or are telling them to wait and see. Remember, at the Compliance Week 2007 Conference, Mark Olson from the PCAOB said he can’t predict if there will be any cost savings for the new standard. That’s because he can’t promise your auditor will implement it.
To be better prepared to negotiate this you’d better get prepared. Know the provisions and keep looking for information. I’ll keep writing about what I see at real companies when they tackle the subject with their auditors. In the meantime, start building your case. The one group that surely never committed to anything with regard to the standard is the Big 4. And they won’t until they get what they want!
We just spent a week in Orlando to learn about AS 5 and how it will effect our auditing approach in the coming year. PwC has already updated the audit guide and database templates to reflect AS5, so we definitely will not be saying “no”