The proposed standard would establish a stand-alone engagement that is entirely voluntary, performed only at the request of the company. Providing a specific standard governing such auditor reporting will facilitate implementation of the requirements of Section 404 of the Act and provide for additional assurance regarding the reliability of public company financial reporting.

The comment period is 45 days. Any final standard adopted will be submitted to the Securities and Exchange Commission for approval.

Section 404 of the Sarbanes-Oxley Act of 2002 requires public companies to annually provide the investing public with an assessment of the company's internal control over financial reporting. The company’s independent auditor must attest to, and report on, management's assessment. As companies have begun to include these reports in their annual financial statement filings, investors are receiving more information about the company’s financial reporting process than was available to them in the past.

In some cases, the company's management and auditor agree that the company's internal control over financial reporting is effective. In other cases management's assessment of the company's internal control may reveal that the company has one or more material weaknesses -- a serious defect in the company's internal control over financial reporting.

When a company eliminates a material weakness, it may determine that disclosure is sufficient. Investors and companies, however, have called for the ability to bolster confidence in management's assertions about those internal control improvements with the added assurance of the company's independent auditor. The PCAOB, therefore, proposed a standard for auditors to provide this assurance when, in the company's judgment, such assurance would be appropriate.