New audit risk assessment standards issued to enhance audit process.Eight new statements on auditing standards Statements on Auditing Standards, commonly abbreviated as SAS, provide guidance to external auditors on generally accepted auditing standards (abbreviated as GAAS) in regards to auditing an entity and issuing a report. collectively referred to as the "Risk Assessment Standards" have been issued by the Auditing Standards Board In the United States, the Auditing Standards Board (ASB) is the senior technical committee designated by the American Institute of Certified Public Accountants (AICPA) to issue auditing, attestation, and quality control statements, standards and guidance to certified public . The new statements, SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. No. 104 through SAS No. 111, will be effective for audits of financial statements for periods beginning on or after Dec. 15, 2006, giving members significant lead time to prepare for implementation. Early implementation is permitted. The Risk Assessment Standards establish standards and provide guidance concerning the auditor's assessment of the risks of material misstatement mis·state tr.v. mis·stat·ed, mis·stat·ing, mis·states To state wrongly or falsely. mis·state  ment n. (whether caused by fraud or error) in a non-issuer
financial statement audit; design and performance of tailored audit
procedures to address assessed risks; audit risk and materiality;
planning and supervision; and audit evidence. A summary of the new
standards has been posted on www.aicpa.org/risk/.
In developing the Risk Assessment Standards, the ASB ASB Asbestos ASB Arbeiter Samariter Bund (German medical help organisation) ASB Anti-Social Behaviour ASB Accounting Standards Board (UK FRC) ASB Aarhus School of Business had three objectives: * A more in-depth understanding of the entity and its environment, including its internal control. * A more rigorous assessment of the risks of where and how the financial statements could be materially misstated. * Improved linkage between the auditor's assessed risks and the nature, timing and extent of audit procedures performed in response to those risks. "The standards will result in more effective audits as a result of better risk assessments and improved design and performance of audit procedures to respond to the risks," said John Fogarty, ASB Chairman. "These standards will better help auditors focus on those areas where risk of misstatement is the greatest." The AICPA has put together a comprehensive plan to support and assist members in implementing the new standards: * An audit risk alert (see page 6 for details). * Presentations and discussions at a number of AICPA conferences between now and Dec. 15, the effective date of the standards. * A self-study CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment program, to be released later this spring (see page 6). * An audit guide, including case studies, due out in the fall. The significance of the standards has generated media attention. Outlets ranging from the accounting trades to general business publications, such as CFO See Chief Financial Officer. .com and the Pittsburgh Business Times, have contacted the AICPA in response to the Institute's press release on the standards' issuance. The Risk Assessment Standards (No. 060704CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. 04) may be purchased through the AICPA Store at www.cpa2biz.com/risk. |
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