With the release of Statement on Auditing Standards (SASs) Nos. 122-126, the Auditing Standards Board (ASB) has substantially completed its project to redraft all of the auditing sections in Codification of Statements on Auditing Standards (contained in AICPAProfessional Standards). The issuance of the clarified standards reflects the ASB’s established clarity drafting conventions designed to make the standards easier to read, understand, and apply. Among other improvements, generally accepted auditing standards (GAAS) now specify more clearly the objectives of the auditor and the requirements with which the auditor has to comply when conducting an audit in accordance with GAAS.
As part of SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, AU-C section 600, Audits of Group Financial Statements, is one of the most significant changes as a result of the Clarity Project. AU-C section 600 expands on the primarily reporting content of AU section 543, Part of Audit Performed by Other Independent Auditors, which provided guidance on situations where two or more auditors reported on parts of a multiple-unit entity.
AU-C section 600 applies whenever there is an audit of financial statements that include the financial information of more than one component, including combined financial statements of components under common control, or group financial statements.
The AICPA has developed informational content and guidance to help its members be prepared for implementing AU-C section 600 upon its effective date, which begins with calendar year 2012 audits.
SAS No. 127, Omnibus Statement on Auditing Standards—2013, Released
SAS No. 127 amends SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, section 600, “Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors),” and AU-C section 800, “Special Considerations—Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks.” The amendment to AU-C section 600 addresses circumstances in which the auditor of the group financial statements may make reference to the audit of a component auditor. The amendment to AU-C section 800 adds an other basis of accounting as a special purpose framework.
The AICPA offers guidance and training on the Group Audit Area of the Clarity Standards, including:
Videos discussing the following areas of the Clarity Standards are also available on AICPA TV:
- Special Considerations - Audits of Group Financial Statements (Including the Work of Component Auditors) - Displayed here.
- Significant Components
- Component Auditors, Materiality and Communication in a Group Audit
Publications and Guidance
- SAS No. 127, Omnibus Statement on Auditing Standards—2013
- TIS Section 8800, Audits of Group Financial Statements and Work of Others, which is available in Technical Practice Aids, along with all other Technical Questions and Answers
- Audit Risk Alert Understanding the Responsibilities of Auditors for Audits of Group Financial Statements
- "What are Group Audits?" an excerpt from the Audit Risk Alert Understanding the Responsibilities of Auditors of Group Financial Statements
- Clarified Auditing Standards Toolkit - Developed to assist you in the implementation process, this toolkit explains the key points of the new standards in detail, gives examples of how the work on your desk could change, and provides specific considerations to keep in mind from the perspective of both the auditor and client. PCPS members receive the Toolkit for free with their membership. Visit www.aicpa.org/pcps to learn more.
- "AU-C Section 600 – Audits of Group Financial Statements" an excerpt from the Clarified Auditing Standards Toolkit
Articles and Media
- "Clarifying the Standard for Group Audit", Journal of Accountancy, March 2013