As expected, the U.S. Securities and Exchange Commission (SEC)voted unanimously July 25 to approve the proposed Public CompanyAccounting Oversight Board (PCAOB) Auditing Standard 5 (AS5). Thisaction finally gives companies the power that they have wantedsince the Sarbanes-Oxley Act (SOX) was passed in 2002: theunassailable right to take a top-down, principles-based approach toSOX, rather than the costly and time-consuming documentationfree-for-all that characterized the first five years.

AS5, which replaces the PCAOB's previous Auditing Standard 2,was created in concert with new SEC guidance to give theregulators' official blessings to a risk-assessment methodology.The new streamlined standard, approved days before the fifthanniversary of SOX, will be effective for fiscal years ending afterNov. 15, 2007.

“We are pleased with the SEC's approval of AS5,” said Mark W.Olson, PCAOB chairman, in a statement. “However, this does not markthe finish line for the PCAOB.”