Statements of Position



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The Auditing Standards Board is issuing this proposed statement on auditing standards (SAS) to provide guidance to practitioners engaged to audit the financial statements of an entity that uses a service organization in connection with the processing of transactions. This proposed Statement also provides guidance to auditors who issue reports for use by other auditors on procedures performed at service organizations. Examples of such service organizations include bank trust departments that invest and hold assets for employee benefit plans and electronic data processing service centers that process transactions and related data for user organizations. This proposed Statement provides guidance to assist the auditor in: 1. Considering the effect of a service organization on the internal control structure of a user organization. 2. Evaluating whether the available audit evidence is sufficient to obtain an understanding of the internal control structure, assess control risk, and perform substantive procedures. 3. Using a service auditor's report. 4. Fulfilling the responsibilities of a service auditor. This proposed Statement would supersede SAS No. 44, Special-Purpose Reports on Internal Accounting Control at Service Organizations. It differs from SAS No. 44 in that the proposed Statement: 1. Incorporates the audit risk concept presented in SAS No. 47, Audit Risk and Materiality in Conducting an Audit, as well as the terminology and concepts of SAS No. 55, Consideration of the 2. Requires a minimum six-month period of coverage for reports expressing an Opinion on a description of policies and procedures placed in operation at a service organization and tests of operating effectiveness. 3. No longer includes reports expressing an opinion on the system of internal accounting control of a segment of a service organization in the classification "service auditors' reports." Such reports commonly have been issued by auditors of bank trust departments and used by auditors of employee benefit plans to fulfill their responsibility regarding internal control; however, these reports generally do not provide the auditor with the means to obtain an understanding of the aspects of the internal control structure at a service organization that may be relevant to a user organization. The appendix of the proposed Statement illustrates the application of the proposed Statement to fiduciaries of employee benefit plans subject to the requirements of the Employee Retirement Income Security Act (ERISA).

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Service industries -- United States -- Auditing


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 : reports on the processing of transactions by service organizations;Reports on the processing of transactions by service organizations; Exposure draft (American Institute of Certified Public Accountants), 1991, Feb. 27



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