Auditing


The ASB has approved for issuance eight statements on auditing standards (SASs) for audits of nonissuers related to risk assessment. These standards address the auditor’s assessment of the risk of material misstatements in financial statement audits and the design of audit procedures responsive to such risks ( www.aicpa.org/members/div/auditstd/2005_06_15_risk_assess.htm ). The SASs, which will be published in an upcoming issue of the JofA , are effective for audits of financial statements for periods beginning on or after December 15, 2006, with early adoption permitted. This spring the Institute will issue an audit guide that will help practitioners implement the standards.

The new standards are SAS no. 104, Amendment to “Due Professional Care in the Performance of Work” of Statement on Auditing Standards No. 1, Codification of Auditing Standards and Procedures; SAS no. 105, Amendment to Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards; SAS no. 106, Audit Evidence, which will supersede SAS no. 31, Evidential Matter; SAS no. 107, Audit Risk and Materiality in Conducting an Audit, which will supersede SAS no. 47 (with the same title); SAS no. 108, Planning and Supervision, which will supersede “Appointment of the Independent Auditor” of SAS no. 1, Codification of Auditing Standards and Procedures, and SAS no. 22, Planning and Supervision; SAS no. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; SAS no. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained, which will supersede SAS no. 45, Substantive Tests Prior to the Balance-Sheet Date, and, along with SAS no. 109, also will supersede SAS no. 55, Consideration of Internal Control in a Financial Statement Audit, as amended; and SAS no. 111, Amendment to Statement on Auditing Standards No. 39, Audit Sampling, as amended.

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