Auditing

The Public Company Accounting Oversight Board (PCAOB) said its 2006 inspections of firms that audit public companies will focus on whether they expended their efforts and resources efficiently in achieving the objectives described in PCAOB Auditing Standard no. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements. This year nine firms—eight U.S. and one Canadian—that each audit more than 100 public companies will undergo inspection, along with selected smaller domestic and foreign firms that audit at least one public entity ( www.pcaobus.org/news_and_events/news/2006/05-01a.aspx ).

The board also issued two informational statements. One, an overview of Auditing Standard no. 4, Reporting on Whether a Previously Reported Material Weakness Continues to Exist, helps auditors understand and comply with the standard’s required auditing procedures ( www.pcaobus.org/standards/standards_and_related_rules/ ). The other is a series of answers to frequently asked questions about the accounting support fee certain public companies and mutual funds pay to fund the PCAOB’s activities ( www.pcaobus.org/support_fees/supportfeefaq.pdf ). The fee applies only to equity issuers and investment-company issuers that during the prior calendar year had average monthly market capitalizations greater than $25 million and $250 million, respectively.