Big Change in Audit Standards
The AICPA issued eight (yes, eight) exposure drafts on June 15th. These represent a huge change in how audit standards work, and will hopefully help auditors do better audits. How they will impact the profitability and cost-effectiveness of our profession’s premiere service remains to be seen.
Based on a cursory scan of the ED’s, they appear to continue the trend started with SAS 99 whereby we go look for things which shouldn’t be there. (or as we say in East TN, ‘go lookin for stuff that just ain’t right). The new ED’s extend this command to ‘go forth and look in many places’ from fraud (promulgated in SAS 99) to financial statement errors and omitted disclosures. The wording changes seem to also remove much of the wiggle room in existing standards.
While this is new as a requirement of standards, many auditors have been doing this for some time already. The new rules thus decree that it isn’t optional any more- so it’s going to be easier for those pesky lawyers to second-guess everything you do.
The changes also appear to bring ASB’s version of GAAS closer to that promulgated by PCAOB and GAO. Now mind you, this may not be such a terrible thing, but I’ve seen the other end of this equation- three workpapers to track down and document a $2 variance in petty cash. Let’s hope common sense is applied liberally to these new rules.
So….. are you and your partners sure you can explain why you did what you did to 12 people who couldn’t get out of jury duty- always a scary thought.
Bottom line: I see fees going up, number of audits and audit firms going down, and risk on engagements going up. What are you seeing out there?
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