The Public Company Accounting Oversight Board (PCAOB) got an earful of harsh criticism recently about its proposed standards for the work auditors should do before signing off on management assessments of companies' internal controls. Most of the 186 comment letters received by the chief auditing regulator were from finance executives, and their common theme was the likely cost the standards would impose on companies. "It's the addition of a costly independent audit attestation that people are objecting to," says Curtis Verschoor, professor of accounting at DePaul University. "That's where the battle lines are drawn."

Arguing that the PCAOB is misinterpreting Congress's intent in Section 404 of the Sarbanes-Oxley Act, the critics assert that Congress only meant for auditors to evaluate these internal assessments, not undertake the much bigger task of conducting their own audit of the underlying controls. Even worse, the proposed PCAOB standard calls for outside auditors to use their own work as the "principal evidence" in determining whether company controls are adequate, rather than relying on work done by internal corporate auditors.

Executives insist that the unnecessarily stringent requirements will add up to many more billable hours and significantly higher costs. In fact, according to Financial Executives International (FEI), companies expect audit fees to rise by as much as 30% to 50% as a result of the work required by the PCAOB's proposed standard. "We believe that the standard as currently drafted creates a situation where the costs far outweigh the benefits of implementation," FEI says. The "duplicative testing" that it requires by external auditors will mean many costly interruptions to business operations, it adds. The comment letters also argue that the PCAOB guidelines for how much testing auditors should do give insufficient weight to the auditors' judgment.