Last week, the SEC finally approved the Public Company Accounting Oversight Board's rule setting standards for the preparation and retention of documentation in connection with audit engagements.
The rule, promulgated by Sarbanes-Oxley after the infamous Andersen shredding incident, mandates that accountants reviewing the books of public companies maintain the audit records for seven years.
The standard will not only apply to financial statement engagements, but will also apply to an audit of internal control over financial reporting, and a review of interim financial information.
As a result, though some who commented on the documentation proposal requested that the effective date be delayed, the PCAOB decided that the rule "should not be delayed beyond the year 2004 and should coincide with the documentation requirements" of Sarbanes-Oxley Section 404.
The standard will be effective for audits of financial statements with respect to fiscal years ending on or after Nov. 15, 2004.
The only change to the original proposal was the inclusion of an amendment that addressed documentation when a principal auditor decides not to make reference to the work of other auditors that performed part of the audit. The proposed amendment, which was already adopted as a PCAOB "interim" audit standard back in April 2003, "imposes unconditional responsibility on the principal auditor to obtain certain audit documentation" from any other relevant auditor.
According to the standard, auditors will have 45 days after their audit report is released to assemble the complete and final set of audit documentation.
A downloadable version of the rule, as well as a briefing paper on the issue, is available from the box above, right.
No comments yet