TOP AUDITING ISSUES FOR 2013 - CCH

MODULE 4 — CHAPTER 12 — Working with the New Codification of Statements on Auditing Standards (Clarified) 139
Refer in the auditor’s report to management’s responsibility for determining
the acceptability of the financial reporting framework, when
management has a choice in determining the framework
Describe in the auditor’s report, or refer to a note describing the purpose
for which regulatory or contractual basis financial statements are prepared
Include an emphasis-of-matter paragraph in the auditor’s report stating
that the special purpose framework is a basis of accounting other
than GAAP
Include specific elements in the auditor’s report when that report is
required by law or regulation to use a specific layout, form, or wording
OBSERVATION
As this course entered production, the AICPA released an exposure draft of proposed
amendments to AU-C section 800. Those amendments would, if they became effective,
add “a definite set of logical, reasonable criteria that is applied to all material items
in the financial statements” to the bases of accounting defined as special purpose
frameworks. Readers of this course should stay abreast of developments on this matter
by referring to the AICPA’s Web site and to CCH’s Accounting Research Manager at www.
accountingresearchmanager.com.
Special Considerations in the United States (AU-C Sections 900–999)
Changes in these sections are primarily formatting changes that do not entail
new substantive requirements.
IMPLEMENTATION CONSIDERATIONS
Since the new Codification will generally be effective beginning with calendar
year 2012 audits, which for many auditors means the first implementation
will be for field work in very early 2013, it is well to begin planning in advance
for implementation. The transitional process will vary greatly according
to a firm’s size and structure, and the nature of its auditing practice. The
following considerations may be helpful in achieving a smooth transition.
Develop Familiarity
The first step toward effective implementation is to develop familiarity with
the clarified standards. This includes the application and other explanatory
material, appendixes, and exhibits. Identify those standards that apply to the
firm’s practice and those that do not. Many firms, for example, may decline to
participate in audits of group financial statements, or to perform compliance
audits. For such firms, AU-C Section 600, Special Considerations—Audits of
Group Financial Statements (including the Work of Component Auditors), and
AU-C Section 935, Compliance Audits, would not be applicable.