Statements of Position

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Description

The Auditing Standards Board (ASB) is proposing an amendment to existing standards to provide guidance on obtaining an understanding with the client about the services to be performed. Currently, such guidance is not included in the Statements on Auditing Standards (SASs) or the Statements on Standards for Attestation Engagements (SSAEs). However, the recently-issued Statement on Quality Control Standards (SQCS) No. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice, (AICPA, Professional Standards, vol. 2, QC sec.20) requires that a CPA firm provide policies and procedures for obtaining an understanding with the client regarding services to be performed. SQCS No. 2 also states that professional standards may provide guidance in deciding whether such understanding should be oral or written. The ASB recognizes a need for authoritative guidance about this issue to reduce misunderstandings as to the nature of the audit and attest engagement to be performed. The proposed Statements would amend existing professional standards to incorporate guidance about obtaining an understanding with the client regarding the services to be performed. The proposed Statements would require the auditor to establish an understanding with the client that includes the objectives of the engagement, the responsibilities of management and the auditor, and any limitations of the engagement. The proposed Statements also would require that the auditor document his or her understanding with the client in the working papers, preferably through a written communication with the client. The proposed Statements would include specific matters that ordinarily would be addressed in the understanding with the client. In addition, the proposed Statements would provide guidance when the auditor believes that an understanding with the client has not been established. The proposed Statements would amend: 1. SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 310), and would change the title of the section from "Relationship Between the Auditor's Appointment and Planning" to "Appointment of the Independent Auditor." 2. SSAE No. 1, Attestation Standards (AICPA, Professional Standards, vol. 1, AT sec. 100).

ISBN

ed97-03-07t

Publication Date

1997

Relational Format

Book

Keywords

Attest function (Auditing) -- Standards -- United States; Contracts, Preliminary

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; Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 7

Proposed statement on auditing standards and statement on standards for attestation engagements : establishing an understanding with the client : (amendments to Statement on auditing standards no. 1, AU section 310,

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