Statement on Auditing Standards-Forming an Opinion and Reporting on Financial Statements

Article excerpt

Statement on Auditing Standards (SAS) Forming an Opinion and Reporting on Financial Statements supersedes SAS No. 1, Codification of Auditing Standards and Procedures, section 410, Adherence to Generally Accepted Accounting Principles (AICPA, Professional Standards, vol. 1, AU sec. 410); SAS No. 1 section 530 paragraphs .01-.02, Dating of the Independent Auditor's Report (AICPA, Professional Standards, vol. 1, AU sec. 530, par. .01-.02); and with the clarified SAS Modifications to the Opinion in the Independent Auditor's Report and the clarified SAS Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor's Report, paragraphs .01-.11, .14-. 15, .19-. 32, .35-. 52, .58-.70, and .74-. 76 of SAS No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 508, par. .01-. 11, .14-. 15, .19-. 32, .35-. 52, .58-.70, and .74-.76).

CONTENTS

Introduction
Scope of This Statement on Auditing
   Standards/1-8
Effective Date/9
Objectives/10
Definitions/11-13
Requirements
Forming an Opinion on the Financial
  Statements/14-19
Form of Opinion/20-22
Auditor's Report/23-44
Comparative Financial Statements and
  Comparative Information/45-58
Information Presented in the Financial
  Statements/59
Application and Other Explanatory Material
Scope of This SAS/A1
Objectives/A2
Definitions/A3
Forming an Opinion on the Financial
  Statements/A4-A13
Form of Opinion/A14-A15
Auditor's Report/A16-A42
Comparative Financial Statements and
  Comparative Information/A43-A55
Information Presented in the Financial
  Statements/A56-A57
Exhibit A: Illustrations of Auditors' Reports
  on Financial Statements/A58
Exhibit B: Comparison of Statement on
  Auditing Standards Forming an Opinion
  and Reporting on Financial Statements With
  International Standard on Auditing 700,
  Forming an Opinion and Reporting on
  Financial Statements/A59
Exhibit C: Comparison of Statement on
  Auditing Standards Forming an Opinion
  and Reporting on Financial Statements With
  International Standard on Auditing 710,
  Comparative Information--Corresponding
  Figures and Comparative Financial
  Statements/A60

INTRODUCTION

Scope of This Statement on Auditing Standards

1. This Statement on Auditing Standards (SAS) addresses the auditor's responsibility to form an opinion on the financial statements. It also addresses the form and content of the auditor's report issued as a result of an audit of financial statements.

2. This SAS is written in the context of a complete set of general purpose financial statements.

3. The clarified SAS Modifications to the Opinion in the Independent Auditor's Report and the clarified SAS Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor's Report address how the form and content of the auditor's report are affected when the auditor expresses a modified opinion (a qualified opinion, an adverse opinion, or a disclaimer of opinion) or includes an emphasis-of-matter paragraph or other-matter(s) paragraph in the auditor's report.

4. The clarified SAS Special Considerations Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks addresses special considerations when financial statements are prepared in accordance with a special purpose framework. (1) The clarified SAS Special Considerations--Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement addresses special considerations relevant to an audit of a single financial statement or of a specific element, account, or item of a financial statement. (Ref: par. Al).

5. The clarified SAS Opening Balances--Initial Audit Engagements, Including Reaudit Engagements applies when the financial statements of the prior period have been audited by a predecessor auditor or were not audited.

6. The proposed SAS Reporting on Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country applies when an auditor practicing in the United States is engaged to report on financial statements that have been prepared in accordance with a financial reporting framework generally accepted in another country not adopted by a body designated by the Council of the AICPA (Council) to establish generally accepted accounting principles that are intended to be used ouside the United States. …