ASB Issues Proposal to Move Content of AT Section 501 Into GAAS
The Auditing Standards Board concluded that, because engagements performed under extant AT section 501, An Examination of an Entity’s Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements, as well as related attestation interpretation No. 1, “Reporting Under Section 112 of the Federal Deposit Insurance Corporation Improvement Act” (AICPA, Professional Standards, AT secs. 501 and 9501), are always integrated with an audit of financial statements, it would be appropriate to move the content of extant AT section 501 from the attestation standards into GAAS, and has released for comment Proposed Statement on Auditing Standards, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements. The proposed SAS also proposes to amend various sections in SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, and to withdraw extant AT section 501 when the proposed SAS is issued as a final SAS.
Read about all of the most significant changes to extant AT section 501 in the explanatory memorandum of the proposed SAS. Comments are due December 10.
Third-Party Verification Question and Answer Matrix Resource Now Available
Increasingly, CPAs are receiving requests from clients, lenders, loan brokers, health insurance providers, adoption agencies, regulators, and various other agencies to confirm client information. In turn, the AICPA has received several inquiries from CPAs on what they often refer to as "comfort letters."
The AICPA has developed a matrix which outlines common requests CPAs have been receiving regarding verifications. This grid provides related responses that may be appropriate, depending on whether or not the CPA has performed additional procedures to corroborate the information.
Learn more about the AICPA's efforts to assist practitioner's in this area by visiting aicpa.org/verifications.
Free Enhancing Audit Quality Resources Available
The AICPA recently launched its Enhancing Audit Quality initiative to assist practitioners in maintaining and improving audit excellence. As part of the initiative, the Institute is pleased to provide two important, free resources.
The first resource is an e-version of the Practice Aid Establishing and Maintaining a System of Quality Control for a CPA Firm's Accounting and Auditing Practice, designed to help CPAs better understand and apply Statement on Quality Control Standards (SQCS) No. 8, A Firm's System of Quality Control (Redrafted) (AICPA, Professional Standards, QC sec. 10). SQCS No. 8 is included as appendix A of this Practice Aid.
The complete Practice Aid presents four hypothetical firms:
- a multi-office firm;
- a single-office firm;
a sole practitioner;
a firm organized in an alternative practice structure.
Visit the Financial Reporting Center to learn more about the Enhancing Audit Quality initiative and to download the Practice Aid Establishing and Maintaining a System of Quality Control for a CPA Firm's Accounting and Auditing Practice.