Overview
of New Standards & Key Auditing Changes
The Auditing
Standards Board, which is the standards-setting body
that governs auditors on non-public entities, has passed
a sweeping set of new standards that rewrite many of
the fundamental principles of a financial statement audit
for non-public entities.
Though not as extensive
as the rules for public companies, these new standards
parallel many of the key aspects of the Sarbanes-Oxley
legislation that public companies have had to comply
with in recent years.
As a direct result of Enron
and other recent corporate scandals, the main objective
of the new standards is to strengthen and maintain the
integrity of the independent financial statement audit.
We support this objective. We
also believe that the new standards will benefit all
stakeholders in the financial reporting process -- those
who prepare financial information, those of us who provide
assurance on the reliability of that information, and
those who use the information to make decisions about
your business.
These new rules are intended
to enhance the auditors’ application
of the audit risk model and will require a more in-depth
understanding and documentation of your overall operations,
business objectives and strategies and the risks associated
with achieving these objectives.
Additionally, the new
standards require us to perform a more thorough evaluation
of, and testing related to, your key internal processes
and related internal controls.
For more information on the new auditing standards visit www.aicpa.org/risk
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