Proposed Statement on Auditing Standards

Amendment to Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, for Nongovernmental Entities

Executive Summary

The AICPA’s Auditing Standards Board (ASB) has issued an exposure draft introducing a proposed Statement on Auditing Standards (SAS) entitled Amendment to Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, for Nongovernmental Entities. This proposed SAS, which applies only to nongovernmental entities, has been issued in response to the Financial Accounting Standards Board’s (FASB’s) proposed Statement of Financial Accounting Standards entitled The Hierarchy of Generally Accepted Accounting Principles.

In connection with its effort to improve the quality of financial accounting standards, the FASB took on a number of initiatives. The FASB proposal moves responsibility for the generally accepted accounting principles (GAAP) hierarchy for nongovernmental entities from the auditing literature (SAS No. 69) to the accounting literature. The GAAP hierarchy had been criticized for being directed at auditors rather than at the reporting entity, which is responsible for selecting accounting principles. Though the FASB proposal makes no substantive changes to the GAAP hierarchy existing in SAS No. 69, the FASB may change the GAAP hierarchy in the future.

The proposed SAS deletes the GAAP hierarchy for nongovernmental entities from SAS No. 69.

The ASB decided to coordinate the provisions and effective date of this exposure draft with the FASB proposed statement, which can be obtained at www.fasb.org. The comment period for this exposure draft ends on June 27, 2005.

Responses should be sent to Sherry Boothe, Audit and Attest Standards, AICPA, 1211 Avenue of the Americas, New York, NY 10036-8775 in time to be received by June 27, 2005. Responses may also be sent by electronic mail to sboothe@aicpa.org. Written comments on the exposure draft will become part of the public record of the AICPA and will be available for public inspection at the offices of the AICPA after July 27, 2005, for one year.

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Download the Exposure Draft