AICPA Issues New Risk Assessment Standards

Eight new statements, collectively referred to as the Risk Assessment Standards, have been approved by the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA). The new Statements on Auditing Standards (SAS), SAS No. 104 through SAS No. 111, will be available on or about March 8, 2006 and will go into effect for audits of financial statements for periods beginning on or after December 15, 2006.


Advertisement


Thousands of executives with financial reporting responsibilities use the Comperio on-line library to access the type of information and interpretive guidance PricewaterhouseCoopers' own professional audit staff use around the world. Key content areas include guidance from the FASB, EITF, PCAOB, SEC, and others as well as PwC's interpretive guidance. Get more information and sign up for a complimentary 30-day trial.


“These standards, along with out standard on fraud, get to the very heart of the audit process,” Chuck Landes, AICPA Vice President, Professional Standards and Services states. “Implementation of the new standards may require auditors to change their approach and perhaps the nature of the audit procedures performed. We believe that these standards, with support from the AICPA, will allow our members to find ways to improve the effectiveness of their audit engagements.”

The Risk Assessment Standards, as a group, establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement (whether caused by fraud or error) in a non-issuer financial statement audit; design and performance of tailored audit procedures to address assessed risks; audit risk and materiality; planning and supervision; and audit evidence. They were developed with three objectives:

  • A more in-depth understanding of the audited entity and its environment, including internal control;
  • A more rigorous assessment of the risks of where and how the financial statements could be materially misstated;
  • Improved linkage between the auditor’s assessed risks and the nature, timing and extent of audit procedures performed in response to those risks.

“The standards will result in more effective audits as a result of better risk assessments and improved design and performance of audit procedures to respond to the risks,” said John Fogarty, Chairman of the Auditing Standards Board. “These standards will better help auditors focus on those areas where risk of misstatement is the greatest.”

The AICPA has put together a comprehensive plan to support and assist members in implementing the new standards including:

  • An audit risk alert, which will be available in March;
  • Presentations and discussions at a number of AICPA conferences between now and December 15, 2006, the effective date of the standards.
  • Two self-study CPE programs, to be released this summer.
  • An audit guide, including case studies, due in the fall.

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
Credit Suisse says pension assets at risk unless court delays sentencingJohn Letzing of the Wall Street Journal reported on Wednesday that Credit Suisse Group AG says its management of billions of dollars in assets for...
The prospect of International Financial Reporting Standards (IFRS) being fully adopted in the United States in the near future are growing less likely, as the Financial Accounting Standards Board (FASB) and the International...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.