Recently Issued Auditing Standards

2007

SAS 102 – Defining Professional Requirements in Statements on Auditing Standards - This SAS replaces “should” with “must” or “is required”; Unconditional requirements and presumptively mandatory requirements. Effective upon issuance.

SAS 103 – Audit Documentation - Supersedes SAS 96 and establishes standards and provides guidance to auditors of non-public entities on audit documentation. Effective for years ending on or after December 31, 2006.

SAS 104 – Due Professional Care in the Performance of Work - Amends SAS 1 and expands the definition of the term “reasonable assurance.” Effective for years beginning on or after December 15, 2006.

SAS 105 – Generally Accepted Auditing Standards - This SAS amends SAS 95. It expands the scope of the second standard of field work from “internal control” to “the entity and its environment including its internal control.” It also extends the purpose from “planning the audit” to “assessing the risk of material misstatement of the financial statements whether due to error or fraud.” Also, “Further audit procedures” replaces “tests to be performed.” It is effective for years beginning on or after December 15, 2006.

SAS 106 – Audit Evidence - This Statement provides guidance about concepts underlying field work: “The auditor must obtain sufficient appropriate audit evidence while performing audit procedures to afford a reasonable basis for the financial statements under audit.” Must perform “risk assessment procedures” on all audits. Effective for years beginning on or after December 31, 2006.

SAS 107 – Audit Risk and Materiality in Conducting an Audit - Supersedes SAS 47 and clarifies the assessment of risk at the financial statement level, introduces the consideration of the risk of misstatement at the disclosure level, clarifies/provides guidance on performing a combined assessment of inherent risk and control risk. Also, it requires an appropriate basis for all risk assessments and eliminates the concept of assessing risk “at the maximum” without support. SAS 107 provides benchmarks for materiality (total revenues, gross profit, income before tax) and it requires the auditor to assess materiality and tolerable misstatement as the audit progresses. The SAS also requires the auditor to accumulate all known and likely misstatements during the audit and communicate to management and those charged with governance (board of directors, audit committee, etc.) their effect on the current period financial statements. Effective for years beginning on or after December 15, 2006.

SAS 108 – Planning and Supervision - Establishes and provides guidance to an auditor conducting an audit in accordance with generally accepted auditing standards on the considerations and activities applicable to planning and supervision, which continue throughout the audit. Effective for years beginning on or after December 15, 2006.

SAS 109 – Understand the Entity and Its Environment and Assessing the Risks of Material Misstatement - Establishes standards and provides guidance about implementing the second standard of field work, regarding obtaining a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of financial statements whether due to error or fraud, and design the nature, timing and extent of further audit procedures. Effective for years beginning on or after December 15, 2006.

SAS 110 – Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained - SAS 110 provides guidance about implementing the third standard of field work, which states that the auditor must obtain sufficient, appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. Effective for years beginning on or after December 15, 2006.

SAS 111 – Audit Sampling – amends SAS 39 - Incorporates guidance from SAS 99 (consideration of fraud in a financial statement audit) and SAS 110 (performing audit procedures in response to assessed risks and evaluating the audit evidence obtained). It enhances guidance relating the auditor’s judgment about establishing tolerable misstatement for a specific audit procedure and on application of sampling to test of controls. Effective for years beginning on or after December 15, 2006.

SAS 112 – Communicating Internal Control Related Matters Identified in an Audit - Establishes standards and provides guidance on communicating matters related to an entity’s internal control over financial reporting identified in an audit of financial statements. SAS 112 is applicable whenever an auditor expresses an opinion on financial statements. It defines the terms “significant deficiency” and “material weakness” and provides guidance on evaluating the severity of control deficiencies. The SAS also requires the auditor to communicate, in writing, to management and those charged with governance, significant deficiencies and material weaknesses identified. Effective for years ending on or after December 15, 2006. Click for more.

SAS 113 - Known as Omnibus 2006, it amends prior audit standards to reflect revised terminology of SAS 102.  Additional amendments were necessary to more clearly link existing standards to the new risk assessment suite of audit standards, SAS 104-111.

SAS 114 - Known as The Auditor's Communication with Those Charged with Governance, it replaces SAS No. 61, Communication with Audit Committees.  SAS No. 114 broadens the applicability of the SAS to audits of the financial statements of all nonissuers and establishes a requirement for two-way communication between the auditors and those charged with governance.  The new standard provides guidance on which matters to communicate, who they should be communicated to and the form and timing of the communication.  SAS 114 is effective for audits of financial statements for periods beginning on or after Dec. 15, 2006.