How new standards for auditors will likely affect the governments they audit.

• Author: Gauthier, Stephen J.

In December 2005, the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants issued Statement on Auditing Standards (SAS) No. 103, Audit Documentation. Two months later, in February 2006, the ASB released a set of eight pronouncements (SAS Nos. 104111) dealing with various aspects of the assessment of risk in a financial statement audit that are commonly referred to as the "risk-assessment suite." May of that same year saw the release of SAS No. 112, Communicating Internal Control Related Matters Identified in an Audit. Normally, the issuance of new auditing standards is largely, if not exclusively, of concern to audit professionals. These 10 pronouncements, however, should be of interest to a much broader audience because of their potential impact on those being audited. This article will explore SAS Nos. 103-112 uniquely from this latter perspective.

A NEW DATE FOR THE AUDITOR'S REPORT AND ITS PRACTICAL IMPLICATIONS (SAS NO. 103)

From the vantage point of those being audited, the most relevant feature of SAS No. 103 is undoubtedly the change in the date of the independent auditor's report. The date of the auditor's report is important because it can affect the amount of audit work that must be performed. Prior to the report date, the auditor is responsible for actively seeking out all information relevant to the fair presentation of the financial statements. After that date, the auditor need only be alert to newly available information.

Prior to SAS No. 103, the independent auditor's report was dated as of the completion of field work, which, in practice, might precede the actual release of the report by several weeks (if not months). In contrast, the new standard directs the auditor to refrain from dating the report until the audit is substantially complete:

The auditor's report should not be dated earlier than the date on which the auditor has obtained sufficient appropriate audit evidence to support the opinion. Among other things, sufficient appropriate audit evidence includes evidence that the audit documentation has been reviewed and that the entity's financial statements, including disclosures, have been prepared and that management has asserted that it has taken responsibility for them. This will ordinarily result in a report date that is close to the date the auditor grants the entity permission to use the auditor's report in connection with the financial statements (report release date). Simply put, the independent auditor's report henceforth normally will bear the date it is delivered to the entity under audit. Since auditors are responsible for actively seeking out new audit evidence that may become available prior to that time, delays in completing the final stages of the audit will increase the likelihood that the auditor will need to perform additional procedures to stay current, which could increase audit fees. Therefore, it is more important than ever for governments to do everything in their power to facilitate the timely completion of the audit. (1)

SAS 103 took effect starting with fiscal years that ended December...