In conjunction with its efforts to clarify generally accepted auditing standards for audits of nonpublic companies and to converge such standards with International Standards on Auditing (ISAs), the Auditing Standards Board of the American Institute of Certified Public Accountants recently issued a proposed Statement on Auditing Standards (SAS), Reports on Application of Requirements of an Applicable Financial Reporting Framework. If finalized, this proposed SAS would supersede SAS No. 50, Reports on the Application of Accounting Principles. The proposed SAS does not change or expand SAS No. 50 in any significant respect. To reflect a more principles-based approach to standard setting, certain requirements that are duplicative of broader requirements in SAS No. 50 have been moved to application and other explanatory material.
Although no ISAs currently exist that correspond to the proposed SAS, certain terms within the proposed SAS have been changed to be consistent with the language used in other SASs redrafted to converge with ISAs, and to reinforce that the standards are framework neutral. The term financial reporting framework, as defined in the clarified SAS, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards, replaces the term generally accepted accounting principles. Financial reporting framework is a more general term, whereas the term generally accepted accounting principles usually is interpreted to be referring to accounting principles generally accepted in the United States of America. The term requirements of an applicable financial reporting framework, therefore, replaces the term application of accounting principles. These changes in terminology are not intended to create a difference in the application of SAS No. 50 and the proposed SAS.
The proposed SAS would be effective for audits of financial statements for periods beginning on or after December 15, 2010. This effective date is provisional but will not be earlier than December 15, 2010. The proposed SAS is available for comment until May 17, 2010 at http://www.aicpa.org/download/auditstd/ED_Reports_on_Application.pdf.
Source: McGladrey & Pullen |