The Securities and Exchange Commission has approved a new slate of risk assessment rules for auditors, making them effective for audits of 2011 financial statements.

In August, the Public Company Accounting Oversight Board finalized eight new auditing standards regarding how auditors should address audit risk. PCAOB standards must be approved by the SEC before they can become final and effective.

Auditing Standards No. 8 through 15 give auditors new guidance about how to perform an audit with risk of material misstatement foremost in mind. The standards cover audit risk, audit planning,  supervision of the audit engagement, consideration of materiality in planning and performing an audit, identifying and assessing risks of material misstatement, the auditor's response to risks of material misstatement, evaluating audit results, and audit evidence.

The new standards take effect for audits of financial statements beginning on or after Dec. 15, 2010. For calendar year companies, that means the new standards will be in effect for audits of 2011 financial statements.

The PCAOB developed the standards to build on its interim rules adopted at the inception of the auditing regulatory structure under Sarbanes-Oxley. The interim rules had been in place as professional standards for as long as two to three decades.

The PCAOB enhanced the existing rules with an increased emphasis on fraud risks and disclosures, and the inclusion of new requirements related to multilocation audits. The new standards also align with more contemporary requirements for the audit of internal control over financial reporting and reflect a concept of materiality that is more consistent with current securities law.

The board first proposed the standards in 2008, then revised and reproposed them in December 2009. Acting PCAOB Chairman Daniel Goelzer said the standards should minimize the chances that an audit will fail to detect material misstatements. He said firms' audit processes already incorporate risk-based methodologies, so expects the changes to audit manuals and staff training necessary to implement the new standards should not be overwhelming.