To address concerns over the clarity, length, and complexity of its standards, the Auditing Standards Board (ASB) is beginning a project to redraft its Statements on Auditing Standards (SAS). While clarifying its Standards, the ASB will also attempt to achieve convergence with the Standards of the International Auditing and Assurance Standards Board (IAASB).
Theredrafted standards will be revised in accordance with the following ASB clarity drafting conventions:
- Establishing objectives for each of the standards
- Including a definitions section, where relevant, in each standard
- Separating requirements from application and other explanatory material
- Numbering application and other explanatory material paragraphs using an A- prefix, and presenting them in a separate section that follows the requirements section
- Using formatting techniques, such as bullet lists, to enhance readability
- Including, where appropriate, special considerations relevant to audits of smaller, less complex entities within the text of the standard
- Including, where appropriate, special considerations relevant to audits of governmental entities within the text of the standard
Bob Dohrer, ASB member and practice leader for our International Assurance Services Group, commented on the redrafting project, “The IAASB recently completed the first phase of its program to redraft existing International Standards on Auditing, so it is appropriate for the ASB to strive for convergence with those standards. In today’s global economy, U.S. auditors need to understand the work required to audit a foreign entity, and foreign auditors will need to understand the requirements of U.S. auditing standards. Also, separating the requirements of the standards from guidance on their application will enhance the overall readability and understandability of the standards.”
The first standards to be redrafted are proposed SAS No. 103 (Redrafted), Audit Documentation, and SAS No. 114 (Redrafted), The Auditor’s Communication With Those Charged with Governance. Proposed SAS No. 103 (Redrafted) has been drafted using International Standard on Auditing (ISA) 230 (Redrafted), Audit Documentation, as a base. Most notably, the language in SAS No. 103 defining the experienced auditor has been redrafted to align with the definition used in ISA 230. Proposed SAS No. 114 (Redrafted) has been drafted using ISA 260 (Revised and Redrafted), The Auditor’s Communication with Those Charged with Governance, as a base. Also, SAS No. 114 has been revised so that the communication of issues of risk and materiality is a required part of the communication of the planned scope and timing of the audit with those charged with governance.
If finalized, the proposed standards will not become effective for audits of financial statements for periods beginning earlier than December 15, 2010. The proposed standards are available for comment until June 30, 2008 at http://www.aicpa.org/download/auditstd/ED_Audit_Documentation.pdf and http://www.aicpa.org/download/auditstd/ED_Communication.pdf. |
