Full tank of GAAS: changes to standards will impact smaller firms.

• Author: Mintzer, Andrew M.
• Position: Regulatoryupdate

do you remember memorizing the 10 Generally Accepted Auditing Standards for the CPA Exam? Well, that's gone. Four years ago the Auditing Standards Board announced a major project to simplify and clarify GAAS and to converge wherever possible with International Standards of" Auditing.

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Improved Organization of GAAS

While most of the extant requirements have carried over to the revised standards, practitioners in smaller firms should develop a plan to train their staff on changes. At press time, the AIGPA publication staff was in the process of writing a "Super SAS," which will codify all of the approved clarified standards the ASB has issued over the past three years.

Statements on Auditing Standards (SAS) have been issued by the ASB for about 40 years The approximately 120 SAS do not have a standard format or formal attempt to use language consistently. Each SAS is codified in the "AT" section of the AICPA's Professional Standards.

The extant AU sections where organized around the 10 GAAS. The clarified GAAS, however, are constructed around the auditor's objectives to obtain reasonable assurance that the financial statements as a whole are free from material misstatement and to report on the financial statements in accordance with the auditor's findings.

Accordingly each AU section will describe a specific auditor objective which, when combined with other AU sections, provide the standards needed to fulfill the auditor's overall objectives. The AU sections will be codified to lit more logically into the framework of the auditor's overall objective (Figure I). As a result, the geography of many standards has been affected.

For example, extant AU 329 was a one-stop place for analytical procedures requirements. Under the newly codified standards, this guidance will be separated from using analytics in substantive tests.

Practitioners should be prepared for a transition period to get accustomed with the new organization.

The ASB has also introduced a glossary. The clarified standards will use words consistently across all of the AU sections. Extant standards may use terms differently as the SAS were issued over a period spanning more than 40 years.

Perhaps the most noticeable change in the formatting of the standards will be in how GAAS communicates what an auditor "does"' to comply with standards. The language used by the different ASBs in writing AU sections was not consistent. GAAS told the auditor what to do with a...