The Auditors Report

ASB Update as of May 31, 2003

William F. Messier, Jr., Georgia State University
Academic Member of the Auditing Standards Board

In this update, I report on what the ASB has been doing since the PCAOB assumed authority for establishing auditing standards for public companies and indicate what the future might hold for the ASB.

Proposals Submitted to the PCAOB
Since my last report, the ASB finalized two projects related to Sarbanes-Oxley. The first project involved the March 18, 2003 Exposure Draft on reporting on internal control under Section 404. The second project involved the April 1, 2003 Sarbanes-Oxley Omnibus Exposure Draft that contained guidance for concurring partner activities, documentation, and communications with audit committees. The ASB received 27 comment letters on the internal control exposure draft and 15 comment letters on the omnibus exposure draft. The Internal Control and Omnibus task forces and the ASB revised the exposure drafts to reflect the comments received and submitted them to the PCAOB for its consideration. The documents submitted to the PCAOB can be found at the AICPA’s website (www.aicpa.org).

Risk Assessments Project
The ASB continues to be involved in the Joint Risk Assessment Task Force. The International Auditing and Assurance Standards Board (IAASB) and the ASB issued their exposure drafts in October 2002 after receiving numerous comment letters. The IAASB will consider issuing the risk assessment standards at its October meeting in Tokyo. After IAASB approval, the ASB will consider adopting these standards for non-public companies.

The Future of the ASB
I have been asked on numerous occasions about the role of the ASB now that the PCAOB is authorized to issue auditing standards for public companies. The ASB will be reformed—there will be more members representing a broader set of constituents as well as a new mission. The ASB’s objectives will be the following:

  • Act as the profession’s voice on auditing standards as they relate to audits of non-public entities, and when commenting on the proposed standards of other auditing standard setters including the GAO, IAASB, and PCAOB.
  • Serve as the profession’s “think tank” on the strategic direction of auditing standards.
  • Assist in rebuilding the public’s trust in the CPA providing audit reports.
  • Commission research that will continuously improve the auditing profession.
  • Address the needs of users of non-public entity financial statements in a timely manner.
  • Promulgate auditing, attestation, and quality control standards related to engagements for non-public entities.
  • Issue clear authoritative guidance for auditors of non-public entities.
  • Work with AICPA staff to develop nonauthoritative guidance for practitioners serving public, non-public, governmental, non-profit, and for-profit entities.

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