Statements of Position

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In serving the public interest, the Auditing Standards Board (ASB) aims to set high quality auditing and assurance standards for nonissuers that are understandable, clear, and capable of consistent application, thereby serving to enhance the quality and uniformity of practice. In doing so, the ASB seeks to balance the needs of a wide range of users, including auditors, those responsible for governance, regulators, and the public in general. Until now, the accounting profession has not expressly defined imperatives used to describe different degrees of the auditor's responsibility when conducting audit engagements in accordance with generally accepted auditing standards and attestation engagements in accordance with the attestation standards. The ASB believes that by defining the levels of responsibilities, auditing and attestation standards will be clarified, thereby assisting auditors and practitioners with their work and improving the quality of audits and attestation engagements. The ASB also believes that using a definition of these imperatives in common with that used by the Public Companies Accounting Oversight Board (PCAOB) and that proposed by the International Auditing and Assurance Standards Board (IAASB) promotes common understanding of the audit or attestation engagement in the United States and abroad and, accordingly, is in the public interest. This exposure draft introduces a proposed Statement on Auditing Standards (SAS) entitled Defining Professional Requirements in Statements on Auditing Standards and a proposed Statement on Standards for Attestation Engagements entitled Defining Professional Requirements in Statements on Auditing Standards for Attestation Engagements. The proposed SAS and SSAE define the terminology the ASB will use to describe the degrees of responsibility that the requirements impose on the auditor or the practitioner. The proposed SAS and SSAE define two categories of professional requirements: 1. Requirements - The auditor or practitioner is required to comply with a requirement in all cases in which the circumstances exist to which the requirement applies. A requirement is indicated by the words must or is required. 2. Presumptive requirements - The auditor or practitioner is also required to comply with a presumptive requirement in all cases in which the circumstances exist to which the presumptive requirement applies, but in rare circumstances, the auditor or practitioner may depart from a presumptive requirement provided he or she documents his or her justification for departure and how alternative procedures performed in the circumstances were sufficient to achieve the objectives of the presumptive requirement. The word should indicates a presumptive requirement. SASs and SSAEs also contain explanatory material that is intended to provide further explanation and guidance on the professional requirements. Such explanatory material is intended to be descriptive rather than imperative. All professional requirements that a SAS or SSAE impose on the auditor or practitioner will be identifiable by the use of must, is required, or should statements. The definitions in the proposed SAS are consistent with the terms adopted by the PCAOB in Rule 3101, Certain Terms Used in Auditing and Related Professional Practice Standards, and the definitions proposed by the IAASB in its exposure draft, Proposed Policy Statement, "Clarifying Professional Requirements in International Standards Issued by the IAASB." The comment period for this exposure draft ends on May 15, 2005. Although the degree of responsibility attached to the terms must, is required, and should was not previously defined, the ASB believes that the terminology, as defined in this proposed SAS and SSAE, is consistent with the existing interpretation of the SASs and SSAEs. The provisions of these Statements will apply to existing SASs and SSAEs. This approach is consistent with the adoption of the use of terms by the PCAOB. The provisions of these Statements are not intended to apply to interpretive guidance issued by the ASB. The drafting conventions in the proposed SAS and SSAE will be applied on a prospective basis to exposure drafts approved for issue after final approval of this SAS and SSAE. Like the IAASB, the ASB intends to review all standards on a regular basis and to address national issues as circumstances require.

Publication Date

2005

Relational Format

Book

Keywords

Auditing -- Standards -- United States; Attest function (Auditing) -- Standards -- United States

Disciplines

Accounting | Taxation

Comments

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 : Defining professional requirements in statements on auditing standards;Proposed statement on standards for attestation engagements : Defining professional requirements in statements on standards for attestation engagements;Defining professional requirements in statements on auditing standards;Defining professional requirements in statements on standards for attestation engagements; Exposure draft (American Institute of Certified Public Accountants), 2005, March 2

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