Over the years I’ve had the good fortune to practice in this profession, there have been periods when auditors have experienced changes to the professional standards and guidance we are required to apply.
This year will not be different for those of us practicing as auditors of financial statements prepared by non-issuer entities here in the United States.
In mid-December the “clarified and converged” auditing standards (C&C Standards) will be effective for audits of financial statements with reporting periods ending on or after that date.
The AICPA Auditing Standards Board issued the C&C Standards In 2011. This issuance was the result of the C&C Project initiated in 2004.
Auditors will now be using terms such as “overall objectives,” “the applicable financial reporting framework,” “special purpose frameworks,” and “terms of engagement.”
In my opinion, the biggest change will be in the format and the wording of the “auditor’s report.” Although the wording is not dramatically different, it has changed. The responsibilities of the auditor and management, and the requirements for the procedures, are still substantially the same.
So what changed? In my opinion, from the perspective of an auditor who applies required procedures, not a lot.
The organization, codification, and format of the standards did change significantly. The codification organization – the numbers applicable to a standard – is indeed different, but there is nothing tough to overcome for users of the standards. The numbers we have used for decades for the general, fieldwork, and reporting standards are different, but that should not present barriers or challenges for their proper application.
The format of the standards is much more user-friendly. The statement format begins with a clarified statement of objective, followed by definitions where needed, the requirements for the procedures to be applied, and concludes with application and explanatory material that cannot be ignored by the auditor. Read the rest of this entry »