ASB Update as of May 31, 2005
William F. Messier, Jr., Georgia State University
Academic Member of the Auditing Standards Board
Chair, International Auditing Standards Subcommittee
Since my last report, the Auditing Standards Board (ASB) and International Auditing Standards Subcommittee (IASC) have met twice. Following are some of the ASB’s most significant actions.
Risk Assessment
At the April meeting, the ASB issued the risk assessment suite of auditing standards for exposure. The set of proposed standards include:
- Amendment to Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards.
- Audit Evidence, which would supersede SAS No. 31, Evidential Matter (AU sec. 326).
- Audit Risk and Materiality in Conducting an Audit, which would supersede SAS No. 47, Audit Risk and Materiality in Conducting an Audit (AU sec. 312).
- Planning and Supervision, which would supersede “Appointment of the Independent Auditor” (AU sec. 310), and SAS No. 22, Planning and Supervision (AU sec. 311).
- Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Assessing Risks).
- Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (Performing Procedures), which would supersede SAS No. 45, Substantive Tests Prior to the Balance-Sheet Date (AU sec. 313), and, together with the proposed SAS Assessing Risks would supersede SAS No. 55, Consideration of Internal Control in a Financial Statement Audit (AU sec. 319).
- Amendment to SAS No. 39, Audit Sampling.
This set of proposed standards is very important for audit educators and researchers. The standards will closely align US auditing standards for assessing risks with the International Standards for Auditing. It is my understanding that all of the major firms have or are in the process of revising their firm methodologies to be consistent with this risk assessment approach.
Reporting on Internal Control
The ASB is in the process of:
- Revising AT 501, Reporting on an Entity’s Internal Control Over Financial Reporting.
- The Audit Issues Task Force discussed the revision of AT 501 at its December 2004 meeting.
- Revising SAS N0 60, Communication of Internal Control Related Matters Noted in an Audit.
Auditor's Report
This task force is revising SAS No 58, Reports on Audited Financial Statements (AU sec. 508), in light of the International Auditing and Assurance Standards Board’s recently issued International Standard on Auditing, The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements.
Other topics that are being addressed by the ASB include:
- Group audits.
- Related parties.
- Accounting estimates.
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