Primary Objectives of PCAOB Auditing Standard No. 5 (AS5)

So what is the primary objectives of PCAOB Auditing Standard No. 5 Regarding Audits of Internal Control Over Financial Reporting

1. Focus the Audit on Most Important Matters
- Top-down, risk-based approach that emphasizes use of judgment.
- Risk assessment is pervasive throughout the audit, including the identification and testing of controls

2. Eliminate Unnecessary Procedures
- Removing the requirement to evaluate management's process
- Consideration of knowledge from prior years (however, rotation is still not permitted).
- Eliminates “principal evidence” requirement
- Provides flexibility to use the work of others to a greater extent, including within the control environment, and performance of walkthroughs under our direct supervision

3. Scale the Audit for Smaller Companies
- Requires auditor to evaluate the size and complexity of a company, and for smaller companies to document how size and complexity affected the audit
- Include descriptions of some attributes of smaller, less complex companies and areas within the audit often affected by such attributes

4. Simplify the Requirements
- Significantly shorter and reorganized to follow an audit’s sequential flow
- The level of detail and specificity has been reduced to encourage auditors to apply professional judgment under the facts and circumstances, rather than taking a one-size-fits-all approach