What's New
NEW AUDIT STANDARDS
The AICPA (American Institute of Certified Public Accountants) recently issued a suite of new auditing standards related to expanded audit procedures, which we will be required to follow as part of our audit of your financial statements for the year ended December 31, 2007.
The Auditing Standards Board (ASB) of the AICPA has issued new Statements on Auditing Standards (SASs) collectively referred to as the Risk Assessment Standards.
These are:
- SAS No. 104, Amendment to Statement on Auditing Standards No. 1, Codification of Auditing Standards and Procedures ("Due Professional Care in the Performance of Work")
- SAS No. 105, Amendment to Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards
- SAS No. 106, Audit Evidence
- SAS No. 107, Audit Risk and Materiality in Conducting an Audit
- SAS No. 108, Planning and Supervision
- SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
- SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained
- SAS No. 111, Amendment to Statement on Auditing Standards No. 39, Audit Sampling
- SAS No. 112, Communicating Internal Control Related Matters in an Audit
These Statements establish standards and provide guidance concerning the auditor's assessment of the risks of material misstatement (whether caused by error or fraud) in a financial statement audit of non-SEC entities, including not-for-profit entities, and the design and performance of audit procedures whose nature, timing, and extent are responsive to the assessed risks.
Additionally, the Statements establish standards and provide guidance on planning and supervision (audit risk and materiality), the nature of audit evidence, and evaluating whether the audit evidence obtained affords a reasonable basis for an opinion regarding the financial statements under audit.
The primary objective of these standards is to enhance auditors' application of the audit risk model in practice by specifying, among other things:
- More in-depth understanding of the entity and its environment, including its internal control, to identify the risks of material misstatement in the financial statements and what the entity is doing to mitigate them.
- More rigorous assessment of the risks of where and how financial statements could be materially misstated based on that understanding.
- Improved linkage between the auditor's assessed risks and the nature, timing, and extent of audit procedures performed in response to those risks.
We anticipate that most audits will result in an overall increase in the effort by both the audited company and our audit team. Accordingly, during this year's audit, as well as in preparation for next year's audit, we will continue to communicate expected changes in the audit process and ways in which you and your staff can assist in making the audit process as efficient as possible.
We would be pleased to discuss the effects of this new standard on your financial statement preparation process.
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When excellence counts, you can count on us. Robin Kramer & Green, LLP.