SOX Center

The PCAOB has killed its reviled internal-control standard. Now it’s up to the SEC to pronounce it officially dead.

Perhaps the most hated rule to come out of the Sarbanes-Oxley Act is dead. Well, almost. On Thursday, the Public Company Accounting Oversight Board voted unanimously to replace its controversial internal-control auditing standard with Auditing Standard No. 5. Critics of the original standard shouldn’t celebrate just yet, however. AS5 requires the Securities and Exchange’s approval, which will likely not happen for at least another month.

The PCAOB’s Auditing Standard No. 2 is the rule largely blamed for creating excessively high audit fees for companies complying with the Sarbanes-Oxley Act. Indeed, since auditors began using AS2, companies have complained that common interpretations of the standard wrought burdensome audits by promoting work for work’s sake and encouraging a rigid checklist approach.

CFO.com: Ding-Dong, AS2 Is Dead