AICPA Proposes Audit Standard for Interim Financial Info

The Auditing Standards Board (ASB) of the American Institute of CPAs (AICPA) has issued a proposed Statement on Auditing Standards (SAS) entitled "Interim Financial Information." The document defines interim financial information as financial information or statements covering a period of less than a full year or for a 12-month period ending on a date other than the entity's fiscal year.

The main reasons for the update, which would replace the standard previously issued on the subject (Auditing Standards No. 71), are to provide additional guidance on the requirements for timely filings set by the Securities and Exchange Commission (SEC), address the recommendations of the Public Oversight Board's Panel on Audit Effectiveness, and incorporate the recommendations of the AICPA's Professional Issues Task Force on "Quarterly Review Procedures for Public Companies."

The proposed standard includes:

  • Guidance for initial reviews of interim financial information. A review is an initial review if the accountant has not audited the financial statements of the prior year-end.

  • Requirements for additional procedures. These include comparing disaggregated revenue data for the current period with that of comparable prior periods, obtaining evidence the interim financial information agrees or reconciles with the accounting records, and making certain inquiries of management as to their knowledge of fraud or fraudulent financial reporting.

  • Guidance on matters related to an entity's ability to continue as a going concern.

The proposed standard also includes examples of analytical procedures that accountants may consider performing, unusual or complex situations that accountants would ordinarily consider inquiring about, and illustrative representation letters.

The effective date would generally be for interim periods in 2003. Comments are requested by September 26, 2002 and should be sent to Any comments received on the proposal will be considered a matter of public record.

Download the exposure draft.

-Rosemary Schlank

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