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![handle is hein.gao/gaobadvvn0001 and id is 1 raw text is:
G A Comptroller General
Kin , Accountability * Integrity * Reliability of the United States
United States Government Accountability Office
Washington, DC 20548
July 12, 2007
Ms. Nancy M. Morris, Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Subject: File No. PCAOB-2007-02-Solicitation of Comments on the Filing of
Proposed Rule on Auditing Standards No. 5, An Audit of Internal Control over
Financial Reporting That is Integrated with an Audit of Financial Statements, and
Related Independence Rule and Conforming Amendments
This letter provides the U.S. Government Accountability Office's (GAO) comments on
the Securities and Exchange Commission's (SEC) Solicitation of Comments on the
filing of the proposed rule for an audit of internal control over financial reporting that
is integrated with the audit of financial statements. On February 26, 2007, we sent a
letter to the Public Company Accounting Oversight Board (PCAOB) laying out our
concerns with its December 19, 2006, draft of this proposed auditing standard.
Overall, we support the proposed rule and believe that it resolves many of our
concerns related to Auditing Standard No. 2, An Audit of Internal Control over
Financial Reporting Performed in Conjunction with an Audit of Financial Statements.
We especially support
* the adoption of a more principles-based approach and a corresponding reduction
in prescriptive detail throughout the standard, and
* the decision to retain the existing standard on the auditor's use of the work of
others in an integrated audit, rather than adopting a new standard as proposed in
the December 2006 PCAOB Exposure Draft.
In addition to the comments in our February 26, 2007, letter we are concerned with
the implications of question 3 in the SEC Solicitation of Comments, which asks:
Is AS 5 sufficiently clear that for purposes of evaluating identified
deficiencies, multiple control deficiencies should only be looked at in
combination if they are related to one another? [underlining added for
emphasis]](ViewImageLocal?handle=hein.gao/gaobadvvn0001&div=1&collection=&method=preview&ext=.png&size=3)