Statements of Position



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The proposed Statement on Auditing Standards (SAS) provides an updated framework within which the auditor can exercise professional judgment in determining the nature and extent of audit documentation needed to comply with professional standards. The guidance in the current documentation standard, which is SAS No. 41, Working Papers (AICPA, Professional Standards, vol. 1, AU sec. 339), has not been significantly changed since September 1967. Given the changes in the auditing environment in recent years, the Auditing Standards Board (ASB) undertook to develop guidance that would provide an updated framework for practitioners performing audits of financial statements. The proposed SAS and amendments to certain other SASs (see appendix B) are the result of the ASB's efforts. In future standards-setting projects, the ASB will consider the need for specific documentation requirements. The concepts developed for this proposed SAS also are relevant to practitioners performing attestation engagements. Accordingly, the exposure draft includes a proposed amendment to Statement on Standards for Attestation Engagements (SSAE) No. 10, Attestation Standards: Revision and Recodification (AICPA, Professional Standards, vol. 1, AT secs. 101-701) (see appendix B). The proposed SAS: 1. Uses the term audit documentation in place of working papers. 2. Reminds auditors that inspection procedures, as described in Statement of Quality Control Standards No. 3, Monitoring a CPA Firm's Accounting and Auditing Practice (AICPA, Professional Standards, vol. 2, QC sec. 30), may be used to evaluate the extent of a firm's compliance with its quality control policies and procedures and that review of audit documentation is an inspection procedure. 3. Incorporates the current requirement in SAS No. 22, Planning and Supervision (AICPA, Professional Standards, vol. 1, AU sec. 311), for a written audit program (or set of audit programs) for every audit. 4. Introduces the concept that audit documentation should (a) enable a reviewer with relevant knowledge and experience to understand from the information contained therein the nature, timing, extent, and results of auditing procedures performed, and the evidence obtained, and (b) indicate the engagement team member(s) who performed and reviewed the work. 5. Lists factors that the auditor should consider in determining the nature and extent of the audit documentation to be prepared for a particular audit area or auditing procedure. 6. For auditing procedures that involve inspection of documents or confirmation of balances, requires audit documentation to include an identification of the items tested and, where appropriate, abstracts or copies of documents such as significant contracts or agreements. (In a current standards-setting project, the ASB is considering documentation requirements for other types of auditing procedures.) 7. Requires documentation of audit findings or issues that in the auditor's judgment are significant, actions taken to address them, and the basis for the conclusions reached. The proposed Statement includes a list of types of significant audit findings and issues. 8. Requires the auditor to adopt reasonable procedures to prevent unauthorized access to the audit documentation. The proposed amendments to other SASs (see appendix B) accomplish the following: 1. SAS No. 22, Planning and Supervision — Move the guidance in paragraph 5 regarding the audit program, modified as necessary, to the new SAS. 2. SAS No. 47, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312) —Add a requirement to document the nature and effect of aggregated misstatements as well as the auditor's conclusion about whether those misstatements cause the financial statements to be materially misstated. 3. SAS No. 56, Analytical Procedures (AICPA, Professional Standards, vol. 1, AU sec. 329) —Add a specific documentation requirement that applies when an auditor uses an analytical procedure as the principal substantive test of a significant financial statement assertion. 4. SAS No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (AICPA, Professional Standards, vol. 1, AU sec. 341) —Add a requirement to SAS No. 59 for the auditor to document the conditions or events that led him or her to believe that there is substantial doubt about the entity's ability to continue as a going concern; the work performed in connection with the auditor's evaluation of management's plans; the auditor's conclusion as to whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time; and the consideration and effect of that conclusion on the financial statements, disclosures, and audit report. The proposed amendment to SSAE No. 10 (see appendix B) incorporates in the attestation standards the concepts and terminology in the proposed SAS. It also unifies the documentation guidance in the attestation standards.

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Auditing -- Documentation -- Standards -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statement on auditing standards and statement on standards for attestation engagements : audit documentation;Audit documentation; Exposure draft (American Institute of Certified Public Accountants), 2001, June 27



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