The Auditors Report

Auditing Standards Board Update - March 2012

Kay W. Tatum - Associate Professor of Accounting
School of Business Administration
University of Miami
Coral Gables, FL

This update marks the first update that I will provide as a member of the ASB. I am honored to serve as the ASB’s academic member. My first official meeting was the ASB’s meeting in San Juan, Puerto Rico on January 10-12, 2012. In preparation for my first meeting, I observed the ASB’s October 25-26, 2011 meeting that was held in New York, NY.

October 2011 Meeting

Table 1 presents for the October 2011 meeting, the Proposed SASs, Task Force Chairs who presented the Proposed SASs, and the outcomes of the deliberations.

Table 1. Proposed SAS, Task Force Chair, and Outcome

October 2011 ASB Meeting

Proposed SAS

Task Force Chair or Discussion Leader

Outcome

Alert as to the Intended Use of the Auditor’s Written Communication

Phil Wedemeyer

Voted to ballot as final SAS.

The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern

Brian Richson

Voted to ballot as exposure draft.

For the first item in Table 1, Alert as to the Intended Use of the Auditor’s Written Communication, the Task Force had been charged to integrate several proposed changes at a previous ASB meeting. Phil Wedemeyer presented the ASB with the revised draft and led a paragraph-by-paragraph discussion of the document. Afterwards, the ASB voted the proposed SAS as final. The SAS is effective for auditor’s written communications related to audits of financial statements for periods ending on or after December 15, 2012.

As to the second item in Table 1, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern, Brian Richson led the discussion of the Task Force’s work on the proposed SAS since the meeting during which it was last discussed. After further consideration, the ASB voted to ballot the proposed SAS for issuance an exposure draft. The comment period ended February 15, 2012. The proposed standard is a clarity redraft of SAS No. 59 so that it is consistent with the format of the other clarified SASs that were recently issued as SAS No. 122, Statements on Auditing Standards: Clarification and Recodification. The ASB will address convergence of the proposed SAS with International Standards on Auditing 570, Going Concern, and other significant issues involving going concern in a later project.

The October meeting concluded with a discussion about the joint meeting of the ASB’s Auditing Issues Task Force with the FASB that was scheduled for the next day, October 27. Topics on that meeting’s agenda included management’s responsibility to assess the entity’s ability to continue as a going concern and the meaning of “auditability.”

January 2012 Meeting

Darrel Schubert, ASB Chair, opened the meeting by welcoming six new members. They are: Jennifer Haskell—partner in Deloitte & Touche LLP’s Professional Practice Network, Barbara Lewis—audit director with Atkinson & Co., Ltd., Carolyn McNerney—co-director of assurance services at SS&G, Don Pallais—who has his own national practice in Richmond, VA., Mike Santay—partner in charge of auditing standards in the National Professional Standards Group of Grant Thornton LLP, and myself. A list of the 2011-2012 board is available at http://www.aicpa.org/Research/Standards/AuditAttest/ASB/Pages/ASBbiography.aspx.

The ASB’s Attestation Recodification Task Force presented to the ASB for the first time at the Puerto Rico meeting. The Task Force’s charge is to revise the attestation standards for clarity and international convergence, beginning with AT 101, Attest Engagements. The Task Force is using the exposure draft of International Standard on Assurance Engagements 3000, Assurance Engagements Other Than Audits or Review of Historical Financial Statements, as abase for its work. Don Pallais, Chair of the Attestation Task Force, skillfully led a three-hour discussion about the attestation standards project. The board provided the Task Force guidance on several issues. In addition, the board agreed that the attestation revision should incorporate concepts found in the risk assessment standards.

The Strategic Planning Task Force also reported to the ASB for the first time at the Puerto Rico meeting. Formed in 2011, the Task Force’s objective is to formulate and draft a strategic plan acceptable to the Auditing Standards Board. The plan will shape the Board’s agenda over the next three to four years. To obtain views from its constituents about what the ASB’s objectives and activities should be during that period, the Task Force developed a survey that was posted on the AICPA Audit and Attest website and sent to a variety of constituents, including CPAs, Regulators, state societies, members of academia, and standard setters. The survey solicited comments about: (1) the ASB’s mission, (2) areas of audit or attestation risk for which new or revised standards are needed, (3) potential ASB projects, (4) international harmonization of standards, (5) guidance and communication, (6) auditing smaller, less complex entities and responding to the needs of small and medium practices, and (7) minimizing differences between ASB and PCAOB standards. The ASB received over 200 responses to the survey, including one from the Audit Section. The Task Force will submit a draft report to the ASB for review and request approval at the ASB’s May meeting.

Future Meetings

The ASB’s next meeting will be in Boston, MA on May 1-3, 2012. Previous and future meeting highlights, as well as the dates of future and past meetings of the ASB can be found at http://www.aicpa.org/research/standards/auditattest/asb/pages/asbmeetingmaterialsandhighlights.aspx.

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