Auditor opinions on management controls and the testing of low-risk controls are two areas where the efficiency of Sarbanes-Oxley Section 404 audits can be greatly enhanced, Thomas Ray, chief auditor for the Public Company Accounting Oversight Board, explained in a recent speech.
The requirement that the outside auditor express an opinion concerning whether management's assessment of the company's internal control over financial reporting is fairly stated does not mean that the auditor is supposed to express an opinion on management's assessment process.
Instead the auditor is supposed to express an opinion as to whether management's required statements about the effectiveness of the company's internal control and its descriptions of any material weaknesses are fairly stated. The auditor's documentation of the evaluation of management's process need not be extensive.
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