The Auditing Standards Board of the American Institute of Certified Public Accountants recently issued three new standards that relate to the auditing of information outside of the financial statements:
- Statement on Auditing Standards (SAS) No. 118, Other Information in Documents Containing Audited Financial Statements - This Standard supersedes the requirements and guidance in AU Section 550. Among other requirements, SAS No. 118 eliminates the distinction between (a) other information that is included in an auditor-submitted document that contains the client’s basic financial statements and the auditor’s report thereon; and (b) other information that is in a client-prepared document. Additionally, this Standard establishes a presumptively mandatory requirement that the auditor read the other information of which the auditor is aware in order to identify material inconsistencies, if any, with the audited financial statements. The Standard also establishes presumptively mandatory requirements for report revisions, communications with management and/or those charged with governance, and other procedures as appropriate when the auditor identifies a material inconsistency.
- SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole – Together with SAS No. 118, this Standard supersedes the requirements and guidance in AU Section 551. In order to opine on whether supplementary information is fairly stated, in all material respects, in relation to the financial statements as a whole, SAS No. 119 establishes a presumptively mandatory requirement that the auditor perform certain procedures in addition to the procedures performed during the audit of the financial statements. Further, the Standard establishes presumptively mandatory requirements for the auditor’s reporting on the supplementary information, taking into consideration the type of report issued on the financial statements and whether the supplementary information is presented with the financial statements.
- SAS No. 120, Required Supplementary Information - This Standard supersedes the requirements and guidance in AU Section 558. SAS No. 120 defines required supplementary information as information that a designated accounting standard setter requires to accompany an entity’s basic financial statements. The Standard establishes that the auditor’s objectives when a designated accounting standard setter requires information to accompany an entity’s basic financial statements are to perform procedures in order to (a) describe, in the auditor’s report, whether required supplementary information is presented; and (b) communicate therein when some or all of the required supplementary information has not been presented in accordance with guidelines established by a designated accounting standard setter or when the auditor has identified material modifications that should be made to the required supplementary information for it to be in accordance with guidelines established by the designated accounting standard setter.
The above Standards are effective for audits of financial statements for periods beginning on or after December 15, 2010. Early application is permitted. |
