Auditing Standards Board Issues Statements
Burke, John F., The CPA Journal
In the last quarter of 1995, the Auditing Standards Board issued four statements on auditing standards and two statements on standards for attestation engagements. Included in these were SAS No. 78, Consideration of Internal Control in a Financial Statement Audit: An Amendment to SAS No. 55, and SSAE No. 6, Reporting on an Entity's Internal Control over Financial Reporting: An Amendment to SSAE No. 2, that are the subject of a separate article appearing this month. The remaining statements are amendments to existing standards.
SAS No. 76-Amendments to Statement on Auditing Standards No. 72, Leffers for Underwriters and Certain er Requesting Parties
This statement amends SAS No. 72 by providing reporting guidance in situations where one of the parties identified in paragraphs three, four, or five of that statement who is not an underwriter or other party with a due diligence defense under section 11 of the Securities Act of 1933 requests a letter without providing the representation letter described in paragraphs six and seven of that statement. Situations intended to be covered include municipal bond offerings. The example letter given is a form of agreed-upon procedures report. The amend ments are effective for such letters issued after April 30, 1996 with earlier application encouraged.
SAS No. 77-Amendments to Statements on Auditing Standards No. 22, Planning and Supervision, No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, and No. 62, Special Reports
These amendments were made to existing literature to address perceived abuses to standards, some of which were encountered on peer reviews.
Planning and Supervision The purpose of this change was to clarify that audit programs are required on all audits. This was done by adding the phrase "for every audit" to the present requirement. Apparently some practitioners took the position that the audit program they prepared and maintained in the papers for the first audit they performed for a client was sufficient for all subsequent audits. This amendment is effective for engagements beginning after December 15, 1995.
Going Concern Some auditors have been issuing reports under SAS No. 59 by using conditional language such as, "If the company is unable to obtain additional financing..." The ASB has amended SAS No. …