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Fraud Risk AssessmentCurrent Developments and Other Matters – Appendix B the written communication is not intended for distribution to parties other than those specified in the written communication. 11. SAS 126, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (Redrafted) As a result of its Clarity Project, the ASB has issued SAS 126 to supersede SAS No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, as amended (AICPA, Professional Standards, AU sec. 341 and AU-C sec. 570). SAS No. 126 does not change or expand SAS No. 59, as amended, in any significant respect. The ASB has moved forward with the clarity redraft of SAS No. 59, as amended, so that it is consistent with the format of the other clarified SASs that were recently issued as SASs 122, 124, and 125. However, the ASB decided to delay convergence with International Standard on Auditing 570, Going Concern, pending the Financial Accounting Standards Board’s (FASB) anticipated development of accounting guidance addressing going concern. FASB issued an exposure draft, Going Concern, in October 2008 but, based on recent decisions, FASB has divided the project into two separate and distinct phases. The FASB issued an exposure draft that addresses Phase 1, “The Liquidation Basis of Accounting,” on July 2, 2012, and the FASB’s Current Technical Plan and Project Updates web page projects reissuance of an exposure draft that addresses Phase II, “Going Concern,” in the fourth quarter of 2012. SAS 126 addresses the auditor’s responsibilities in an audit of financial statements with respect to evaluating whether there is substantial doubt about the entity's ability to continue as a going concern. This SAS applies to all audits of financial statements regardless of whether the financial statements are prepared in accordance with a general purpose or a special purpose framework. This SAS does not apply to an audit of financial statements based on the assumption of liquidation (for example, when [a] an entity is in the process of liquidation, [b] the owners have decided to commence dissolution or liquidation, or [c] legal proceedings, including bankruptcy, have reached a point at which dissolution or liquidation is probable). 12. SAS 127, Omnibus Statement on Auditing Standards—2013 Amendments to SAS 122 Section 600 Paragraph .25a of SAS 122 section 600, “Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)” (AICPA, Professional Standards), precludes making reference to the audit of a component auditor in the auditor’s report on the group financial statements unless the component’s financial statements are prepared using the same financial reporting framework as that used for the group financial statements. These amendments permit making reference to the audit of a component auditor in the auditor’s report on the group financial statements when the component’s financial statements are prepared using a different financial reporting framework than that used for the group financial statements, if certain conditions are met. The amendments also add a requirement, when reference is made to a component auditor’s report on financial APP.B-11
Fraud Risk AssessmentCurrent Developments and Other Matters – Appendix B statements prepared using a different financial reporting framework, for the auditor’s report on the group financial statements to disclose that the auditor of the group financial statements is taking responsibility for evaluating the appropriateness of the adjustments to convert the component’s financial statements to the financial reporting framework used by the group. The amendments also add application material that addresses making reference when the financial reporting frameworks differ. Paragraph .25b of SAS 122 section 600 precludes making reference to the audit of a component auditor in the auditor’s report on the group financial statements unless the component auditor has performed an audit that meets the relevant requirements of generally accepted auditing standards (GAAS). Paragraph .A54 of SAS 122 section 600 provides guidance on how the group engagement partner may determine that the audit performed by the component auditor meets the relevant requirements of GAAS. These amendments clarify that requirement and add additional guidance regarding that determination. The amendments also add a requirement that when the auditor of the group financial statements is making reference to the audit of a component auditor and has determined that the component auditor performed additional audit procedures in order to meet the relevant requirements of GAAS, the auditor’s report on the group financial statements should indicate the set of auditing standards used by the component auditor and that additional audit procedures were performed by the component auditor to meet the relevant requirements of GAAS. These amendments also clarify that the group engagement team is required to determine component materiality for those components on which the group engagement team will assume responsibility for the work of a component auditor who performs an audit or a review. Amendments to SAS 122 Section 800 SAS 122 section 800, “Special Considerations: Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks,” introduced the term special purpose framework, which is a cash, tax, regulatory, or contractual basis of accounting. These amendments add an other basis of accounting that uses a definite set of logical, reasonable criteria that is applied to all material items appearing in financial statements to the bases of accounting defined as special purpose frameworks. Effective Dates The amendments to SAS 122 section 600 are effective for audits of group financial statements for periods ending on or after December 15, 2012. The amendments to SAS 122 section 800 are effective for audits of financial statements for periods ending on or after December 15, 2012. 13. OMB Circular A-133, 2013 Compliance Supplement APP.B-12
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PREFACE This audit manual supersede
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Introduction This manual sets forth
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(9) Establish minimum standards for
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Section 9-3-213, Tennessee Code Ann
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SECTION A GENERAL INFORMATION Compt
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Auditing Standards and Requirements
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