As noted in our previous post, the AICPA has issued several new auditing standards that are applicable for audits ending after 12/16/07. We will briefly discuss the 8 new standards:
SAS 104 – More clearly defines the level of assurance auditors are to provide the client and interested 3rd parties regarding whether or not the client’s financial statements are free of material misstatement. This has not direct client impact.
SAS 105 – Expands the scope of the understanding that the auditor must obtain of the client’s internal control. The auditor will likely attempt to identify key revenue and expense ‘streams’ and walkthrough the client’s process of collecting those revenues and expenses from the transactions inception to it being booked in the general ledger. During those walkthroughs (performed with relevant client employees) the auditor will identify controls currently in place that are “key” to the financial statement reporting process. This understanding will provide auditors evidence that ultimately will support the opinion on the financial statements.
Posted by Anthony Miller
