Think your private company is safe from new, stricter auditing standards because you’re not subject to Sarbanes Oxley? Feeling smug because you’re not experiencing the hassle and expense of SOX compliance? Thought you’d escaped the pain by taking your public company private?

Not so fast! Your time may have come: Statements of Auditing Standards 104-111 have arrived. These new standards affect every nonpublic company that needs an audit — whether it’s for bankers, insurers or shareholders. And they’re effective for financial statements for periods beginning on or after Dec. 15, 2006.

South Florida companies in all industries will be affected.

The good news is that, like SOX, these new standards are designed to help improve corporate governance, which could protect your company from risk. The new standards, dubbed ‘’risk assessment standards,'’ not only require your auditors to develop a better understanding of your internal controls and assess whether those controls would work if they were functioning as designed — they also require full documentation of these controls. The goal is for auditors to follow more specific protocols to support their opinions on whether financial statements are free from material misstatements.

[1] MiamiHerald: New standards affect companies missed by Sarbanes Oxley