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Accounting Board OKs New Audit Standard

March 10, 2004|From Reuters

In a move to make U.S. audit firms more accountable, the Public Company Accounting Oversight Board on Tuesday asked auditors to take on more responsibility while scrutinizing accounting systems of clients.

The accounting board, the new U.S. regulator for auditors, voted 5 to 0 to require auditors to review corporations' internal controls when auditing their financial statements to make them less vulnerable to manipulation.

Implementing orders from Congress, the accounting board approved the new audit standard. It must now be reviewed by the Securities and Exchange Commission.

Accounting experts believe the new standard will go a long way toward weakening the nexus between poor internal controls and the risk of fraud in a company, a common theme in some of the biggest accounting scandals that have hit corporate America in the last three years.

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