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 smacey@aicpa.org. Any comments received on the proposal will be considered a matter of public record.

Download the exposure draft.

-Rosemary Schlank

You may like these other stories...

Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.