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This exposure draft proposes a new requirement that an auditor advise his client's senior management and the board of directors or its audit committee of material weaknesses in internal accounting control that come to his attention incident to his examination of the client's financial statements. Such required communication will aid management in discharging its responsibility to establish and maintain a system of internal accounting control by providing them with additional knowledge of material weaknesses in such control. The importance of establishing and maintaining an effective system of internal accounting controls has recently been the subject of increased public discussion. One suggestion is that a periodic auditor's report on the adequacy of a public company's system of internal accounting control could aid investors and others who rely on published financial information. This proposed standard does not address the expectations implicit in that suggestion.
Disclosure in accounting; Corporations -- Auditing
Accounting | Taxation
American Institute of Certified Public Accountants. Auditing Standards Executive Committee, "Proposed statement on auditing standards : Required communication of material weaknesses in internal accounting ;Required communication of material weaknesses in internal accounting control" (1976). Statements of Position. 370.