The AICPA’s Auditing Standards Board issued the first two exposure drafts resulting from its clarity project, through which all of its auditing standards will be redrafted over the next two to three years.
The goal of the clarity project is to make auditing standards easier to read, understand and apply. Consistent with the ASB’s strategy to converge its standards with those of the International Auditing and Assurance Standards Board (IAASB), each proposed standard has been redrafted using the corresponding International Standards on Auditing (ISA) as the basis.
The ASB issued proposed Statement on Auditing Standards (SAS) no. 103 (Redrafted), Audit Documentation , and proposed SAS no. 114 (Redrafted), The Auditor’s Communication With Those Charged With Governance. The comment period on the EDs ends June 30, 2008. The drafts are available at www.aicpa.org/Professional+Resources/Accounting+and+Auditing/ Audit+and+Attest+Standards/Exposure+Drafts+of+Proposed+Statements/.
The PCAOB adopted Rule 3526, Communication with Audit Committees Concerning Independence , and an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles.
Rule 3526 will require a registered firm, before accepting an initial engagement pursuant to the PCAOB’s standards, to describe in writing to the audit committee all relationships between the firm or any of its affiliates and the issuer or persons in a financial reporting oversight role at the issuer that could reasonably be thought to bear on the firm’s independence. Registered firms will also be required to discuss with the audit committee the potential effects of any such relationships on the firm’s independence.
If approved by the SEC, Rule 3526 would supersede the board’s interim independence requirement, Independence Standards Board Standard no. 1, Independence Discussions with Audit Committees, and two related interpretations.
The amendment to Rule 3523 excludes from the scope of the rule tax services provided to a person in a financial reporting oversight role, or an immediate family member of such a person, during the portion of the audit period that precedes the beginning of the professional engagement period.
Rule 3526, if approved by the SEC, would become effective Sept. 30, 2008, or 30 days after SEC approval, whichever is later. The amendment to Rule 3523 would become effective immediately if approved by the SEC.
A release on the new rule and the amendment is available at www.pcaobus.org/Rules/Docket_017/2008-04-22_Release_2008-003.pdf.