There is good news and bad news. First, the good news: for over two decades, publishers of auditing practice aids have supplied us with forms, checklists and programs to comply with existing professional standards. The bad news: the volumes of accounting and auditing pronouncements have increased exponentially causing huge stacks of paper or long lists of electronic forms for even the smallest audits.
When the new audit risk assessment standards were effective in 2007, the length and number of audit practice aids from most publishers increased substantially. Because it became very difficult to determine which documentation was required to comply with the new standards, conservatism ruled and many auditors used all the practice aids available. Audit quality was good but budget overrun was high!
Here is a foundational principle of audit efficiency. The root of audit requirements is not the practice aids purchased from a provider. Audit requirements for non-public and non-profit entities are rooted in the Statements on Auditing Standards (SASs) published by the Auditing Standards Board of the AICPA. Audit efficiency begins with choosing documentation that, first, satisfies the applicable requirements in SASs and, second, is the most efficient considering engagement circumstances. Watch for some examples in the next blog.