The AICPA Auditing Standards Board (ASB) is proposing a new Statement on Auditing Standards (SAS) intended to improve the quality of group audits.
The proposed SAS , titled Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors) , seeks to strengthen the auditor’s approach to planning and performing group audits, and to improve the quality of such audits, by doing the following: Clarifying and reinforcing that all applicable AU-C sections in AICPA Professional Standards need to be applied in a group audit engagement. It does so by establishing stronger linkages to the other AU-C sections, in particular, to AU-C Section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement ; AU-C Section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained ; and to the proposed SAS Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards .
Including subsections in each section of the proposed SAS that describe the requirements that apply when component auditors are involved, helping to emphasize and clarify the interactions that are needed between the group auditor and component auditors, as well as helping to enhance the scalability of the proposed SAS. (The proposed SAS notes that a referred-to auditor is not a component auditor).
Providing greater clarity on the scope and applicability of the proposed SAS, including through enhancements to the definition of group financial statements.
If issued as final, the proposed SAS would supersede SAS No. 122, Statements on Auditing Standards: Clarification and Recodification , as amended, Section 600, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors).
The ASB is following its strategy of converging its standards with the standards of the International Auditing and Assurance Standards Board (IAASB), specifically, International Standard on Auditing (ISA) 600, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors) (ISA 600 [Revised]). In explaining why the ASB is converging the proposed SAS with ISAE 600 (Revised), the ASB identified the following reasons: The issues that led the IAASB to update its group audit standard are equally present and important in the United States.
It is not feasible for firms that perform engagements following IAASB and ASB standards to comply with fundamentally different standards for group audits.
Among the issues the new group […]
