The Center for Audit Quality issued a practice aid on testing journal entries. The nonauthoritative document is designed to be a reference for auditors of public companies when applying certain sections of AU section 316, Consideration of Fraud in a Financial Statement Audit, of the PCAOB’s interim auditing standards. It specifically addresses gaining an understanding of internal controls over journal entries; selecting journal entries for testing, including the use of computer-assisted audit techniques; evaluating journal entries; and documenting the results of testing.

The guidance is based on existing professional literature, information gathered by members of a CAQ task force and the experiences of CAQ member firms. The practice aid is available at

 The AICPA issued the Audit and Accounting Guide Airlines, which provides the latest information on accounting and auditing issues affecting the airline industry. The guide addresses a number of new transactions and issues that have emerged over the years, including frequent flyer programs, electronic ticketing, revenue breakage, power-by-the-hour maintenance arrangements, amendable labor contracts, and airline intangible assets.

Chapters of the guide are dedicated specifically to air cargo and regional carriers, and auditing sections include exhibits that provide examples of substantive audit procedures and cover significant accounts unique to the airline industry and related controls. The guide also reflects Statement on Auditing Standards no. 104 through no. 111, commonly referred to as the risk assessment standards. The guide is available for purchase at (product #012698).

 The Auditing Standards Board issued the second clarified auditing standard resulting from its clarity project, which aims to make U.S. GAAS easier to understand and apply and gives each standard a principles- based objective. Statement on Auditing Standards, Audit Documentation (Redrafted), will supersede AU section 339, Audit Documentation.

The standard is expected to be effective for audits of financial statements for periods beginning on or after Dec. 15, 2010. The effective date is provisional but will not be earlier than Dec. 15, 2010. The clarified standard is available at See also “Official Releases,” JofA, Feb. 09, page 90.

The ASB also issued Interpretation no. 7, Reporting on the Design of Internal Control, of AT section 101, Attest Engagements, which is available at (see “Official Releases,” page xx), and Proposed Statement on Auditing Standards (SAS), Compliance Audits. The proposed SAS would supersede SAS no. 74 (AU Section 801), Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance. The proposal, available at, is intended to update and clarify requirements and provide guidance to auditors who audit and report on an entity’s adherence to applicable compliance requirements. The comment period ends April 30.


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