February 26, 2008 / 6:20 PM / 10 years ago

New US audit standard aims to fix problems quickly

WASHINGTON, Feb 26 (Reuters) - The U.S. corporate audit industry’s watchdog on Tuesday proposed a new standard to identify and correct problems in audits before they are issued, a step meant to strengthen the quality of audits.

The Public Company Accounting Oversight Board said its new standard would give auditors of public companies such as PricewaterhouseCoopers [PWC.UL] and Deloitte & Touche [DLTE.UL] a framework for conducting their own reviews of their audits.

The PCAOB was set up by Congress in 2002 to police auditors after a wave of accounting scandals, such as the implosion of Enron Corp. The board sets standards for auditors.

Audit firms now bring in another partner who is not associated with audits to review them and ensure quality.

The new standard gives reviewers a more explicit focus on identifying and reviewing likely high-risk areas.

“By focusing the review on higher risks, the proposed standard would increase the likelihood of identifying and correcting deficiencies in the audit prior to the issuance of the auditor’s report,” PCAOB Chairman Mark Olson said in a statement.

The board is seeking public comment on the standard. (Reporting by Rachelle Younglai, editing by Gerald E. McCormick)

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