New Auditing Standards for 2008
The American institute of Pubic Accountants established eight new auditing standards in 2006 which have now gone into effect for current year audits These changes are the most significant change to the way audits have been performed in three decades. A bright-line explanation of the new Standards is as follows:
- SAS #104 Due Professional Care in the Performance of Work
Clarifies that auditors are to plan and perform the audit to obtain reasonable assurance that there is sufficient and appropriate audit evidence so that risk will be limited to a low level. - SAS #105 Amendment to Statement on Auditing Standards No. 95
Expands the standard of field work from internal control to the entity and its environment and extends its purpose from planning the audit to assessing the risk of material misstatement. - SAS #106 Audit Evidence
Defines audit evidence and defines relevant audit assertions. - SAS #107 Audit Risk and Materiality in Conducting an Audit
Provides guidance on the auditor's consideration of audit risk and materiality when performing an audit. - SAS #108 Planning and Supervision
Clarifies requirements for planning and supervising the audit. - SAS #109 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement
Provides specific methodology to assess risk, and understand the entity and internal control. - SAS #110 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained
Provides guidelines to design audit procedures based on risk and evaluate the results of those procedures. - SAS #111 Amendment to Statement on Auditing Standards No. 339, Audit Sampling
Enhances guidance relating to the auditor's judgement about establishing audit thresholds and implementation of sampling.
Under these new auditing standards, auditors are required to revisit and gain a more thorough understanding of their clients' businesses, systems and controls. They must also evaluate the effectiveness of those controls in order to assess risks within the entity. Auditors will then customize their audit approach based on these factors. This will require that additional time be spent on the audit by all levels of the auditing team, especially in the initial implementation year. Your audit will be customized to your business. As a result, we feel that our audit assurance will provide you with more comfort and value which is one of the goals and objectives AICPA is striving for.