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For an Assessment of the Effectiveness of SAS No. 82, Consideration of Fraud in a Financial Statement Audit


The AICPA is committed to evaluating how well SAS No. 82, Consideration of Fraud in a Financial Statement Audit, is meeting the Auditing Standards Board's (ASB's) objectives. This commitment was established in the exposure draft of SAS No. 82 issued in May 1996 whereby the ASB noted that it will "develop a process to obtain feedback on the new standard periodically to assess how well it is accomplishing its objectives and to identify further steps that need to be taken. This feedback process should be helpful in defining further research on fraud deterrence and detection."

Accordingly, this Request for Proposal is designed to stimulate research on the effects of SAS No. 82 on audit practice, including evidence about the improved effectiveness of an audit of financial statements in detecting material misstatements due to fraud. The AICPA will facilitate access to audit firm data for selected projects.

Broad Objectives of the Research

The ASB seeks proposals for research relevant to two broad objectives. The first objective is to provide research to assist the ASB in its assessment of the effectiveness of SAS No. 82. The second objective is to provide research to assist the ASB in its efforts to continually improve SAS No. 82 related guidance by addressing how emerging business and technology trends affect the process of detecting material financial statement misstatements due to fraud.

Potential research issues related to the ASB's objectives might include questions such as:

  • How has the fraud risk assessment information obtained and considered by the auditor affected the manner in which the audit is executed? To what extent have auditing procedural methods been affected by the auditor's mandated fraud risk assessment process? What changes can be made to improve the auditor's response (via changes to the auditor's plan) to the fraud risk assessment once that assessment is complete?
  • How have the requirements of SAS No. 82 affected the auditor's behavior and mindset? How has the process of making a formal assessment of the risk of material misstatements due to fraud affected the auditor's level of professional skepticism?
  • How complete and discriminating are the fraud risk factors, which are included in SAS No. 82? Are there factors currently in SAS No. 82 that distract the auditor from recognizing the presence of material misstatements due to fraud? Is there a basis for weighting or combining various fraud risk factors during the fraud risk assessment process?
  • How are new technologies changing the risk that financial statements contain material misstatements due to fraud? What new opportunities for fraud are created with the implementation of new technologies? What new technologies implemented by client management are improving the prevention and detection of fraud?
  • How can analytical procedures be designed and implemented to increase the accuracy of the auditor's fraud risk assessment process? How is technology being used to increase the auditor's accuracy when developing expectations about financial statement account balances?
  • What effect has the fraud risk assessment information had on the audit firm's business risk management processes? Has information obtained in the fraud risk assessment process affected client acceptance and retention decisions? How have the SAS No. 82 requirements affected the assignment of personnel on the audit team and the workpaper review process? How has SAS No. 82 affected auditor training?

This list of potential research questions is designed to provide direction and to stimulate the identification of further research questions. It is not designed to be all-inclusive. A research proposal does not need to address both of the ASB's broad objectives to be acceptable.

Research Methodology

The AICPA expects to have the support of several auditing firms who are willing to provide access to firm data and personnel for the selected research project(s). All types of research methodologies are acceptable (i.e., archival, behavioral, experimental, theoretical, analytical, etc.). The proposal should contain a full description of the proposed methodology.

The ASB seeks to have the research completed and preliminary results summarized for their consideration by early part of the year 2000. Therefore, research proposals should reflect methodologies that can be conducted during the spring, summer, and fall of 1999 to ensure the delivery of the preliminary research findings by early 2000.

Publication of Research Results

Researchers will provide a summary of the results for the ASB by the early part of the year 2000 that is tailored more for an audience of professionals than an academic journal audience. Details concerning publication of the research results can be determined by mutual agreement with the researchers after selection of the RFPs.

Proposal Content

Format. Proposals should contain the following information:

  • Relevant background theory and prior empirical research related to the proposed research question(s).
  • Proposal hypotheses and related research methodology that will be used to test the hypotheses.
  • Data requirements, including how confidentiality will be preserved as required.
  • Discussion of how the research will address the ASB's two broad objectives related to the effectiveness of SAS No. 82 and the continual improvement of guidance related to SAS No. 82.
  • Timetable with various milestones to ensure completion of research by early 2000.
  • Brief statements of particular qualifications of the researcher(s) which relate to the requirements of the project.


The AICPA anticipates funding up to $15,000 as a stipend for each selected project in addition to providing reimbursement for reasonable out-of-pocket expenses. Research proposals should include estimates of out-of-pocket expenses that would be associated with the particular research methodology proposed. For example, if the research methodology involves examination of selected audit workpapers in practice offices, the proposal should indicate the anticipated travel costs associated with conducting that type of examination. In the event that a proposal is selected, but the total support requested is not available (e.g., stipend, out-of-pocket expenses, or auditing firm support), the applicant will be contacted concerning willingness to conduct a study modified in those terms.

Proposal Deadline

Research proposals must be submitted by February 1, 1999 to:

Jane Mancino
Technical Manager, Audit and Attest Standards
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775

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