Statements of Position

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The Auditing Standards Board (ASB) is issuing this proposed statement on auditing standards (SAS) and statement on standards for attestation engagements (SSAE) to provide auditors1 with improved guidance on performing an audit of an entity's financial statements and performing attestation services. The ASB is proposing changes to SAS No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 31 9), to replace the SAS No. 55 definition and description of the internal control structure with the definition and description in Internal Control — Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO report). The ASB believes the COSO report rapidly is becoming a widely accepted framework for sound internal control among U.S. organizations and its acceptance and use will continue to grow. Therefore, the ASB believes it is appropriate to revise SAS No. 55 to incorporate the COSO report to provide timely and useful guidance to auditors. In addition, the ASB is proposing changes to SSAE No. 2, Reporting on an Entity's Internal Control Structure Over Financial Reporting (AICPA, Professional Standards, vol. 1, AT sec. 400), to conform the description of elements of an entity's internal control structure to the components of an internal control structure contained in the proposed amendment to SAS No. 55 and in the COSO report. This proposed Statement consists solely of amendments to existing statements. The proposed amendments are outlined in the following paragraphs. SAS No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 319.01, .02, .06 through .22, and .66 through .69) This proposed amendment would: 1. Replace the definition of the internal control structure in SAS No. 55 with the COSO report definition. 2. Replace the three elements of the internal control structure in SAS No. 55 with the five components in the COSO report. 3. Replace appendix A and delete appendixes B, C, and D of SAS No. 55. 4. Make editorial conforming changes for terminology throughout SAS No. 55. SSAE No. 2, Reporting on an Entity's Internal Control Structure Over Financial Reporting (AICPA, Professional Standards, vol. 1, AT sec. 400.01, .12 through .16, .20, .26, and .27) This proposed amendment would: 1. Replace the three elements of the internal control structure with the five components of the internal control structure contained in the proposed amendment to SAS No. 55 and the COSO report. 2. Make editorial conforming changes throughout SSAE No. 2 to substitute components for elements. As a result of amending SAS No. 55 and SSAE No. 2 to incorporate the COSO report, as outlined above, this proposed Statement also includes amendments to: 1. SAS No. 70, Reports on the Processing of Transactions by Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 324.07, .26 and .42) 2. SAS No. 60, Communication of Internal Control Structure Related Matters Noted in an Audit (AICPA, Professional Standards, vol. 1, AU sec. 325.02 and .04) In addition, as a consequence of the foregoing changes to existing standards, the proposed Statement would require updating the guidance in the Audit Guide Consideration of the Internal Control Structure in a Financial Statement Audit and other audit and accounting guides that provide guidance on the internal control structure in audits of specific industries.

Publication Date

1995

Relational Format

Book

Keywords

Attest function (Auditing) -- Standards -- United States; Auditing, Internal -- Standards -- United States; Industrial management -- United States -- Evaluation

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 and statement on standards for attestation engagements : amendments to statements on auditing standards and statements on standards for attestation engagements to incorporate the internal control-integrated framework report ;Amendments to statements on auditing standards and statements on standards for attestation engagements to incorporate the internal control-integrated framework report; Exposure draft (American Institute of Certified Public Accountants), 1995, Feb. 23

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