Wiley Practitioner's Guide to GAAS 2013: Covering all SASs, SSAEs, SSARSs, and Interpretations

PCAOB 5: An Audit of Internal Control Over Financial Reporting That Is Integrated with an Audit of Financial Statements1

IMPORTANT NOTE: The guidance in this section applies to the preparation and issuance of audit reports for all issuers as defined by the Sarbanes–Oxley Act.

EFFECTIVE DATE AND APPLICABILITY

Effective Date	This standard currently is effective.
Applicability	Engagements to perform an audit of management’s assessment of the effectiveness of internal control over financial reporting that is integrated with an audit of the financial statements.

DEFINITIONS OF TERMS

Competence. The attainment and maintenance of a level of understanding and knowledge that enables a person to perform ably the tasks assigned to him or her.

Control objective. Provides a specific target against which to evaluate the effectiveness of controls. It generally relates to a relevant assertion and states a criterion for evaluating whether the entity’s control procedures provide reasonable assurance that a misstatement or omission in that assertion is prevented or detected by controls on a timely basis.

Deficiency in internal control over financial reporting. Exists when the design or operation of a control does not allow management or employees to prevent or detect misstatements on a timely basis.

Design deficiency. Exists when a control necessary to meet the control objective is missing, or an existing control is not properly designed so that, even if the control operates as designed, ...