TOP AUDITING ISSUES FOR 2013 - CCH

MODULE 2 — CHAPTER 7 — Current Implementation Issues for Auditing Standards 79
STUDY QUESTION
3. All of the following statements apply to the auditor’s communication of significant
deficiencies and material weaknesses to management except:
a. The communication should be written.
b. The communication should include an explanation of the potential effects of
significant deficiencies and material weaknesses.
c. The communication should be made within 60 days of the report release
date.
d. The communication should be documented when it is made orally.
REPORTING
If the profession’s reception of the reporting requirements of Statement
of Standards on Accounting and Review Services No. 19 (SSARS 19) for
compilations and reviews is any indication, the profession is likely to be
in for some difficulty in implementing the new form and content of the
auditor’s report which took effect for audits of periods ended on or after
December 15, 2010.
SSARS 19 brought about the most sweeping changes to reporting
practices for compilations and reviews in the last 20 years. In spite of extensive
advance publicity from the AICPA, a significant number of practitioners
failed to implement these changes. Peer reviews have detected these failures,
sometimes into the second year after the effective date of SSARS 19.
Implementation of New Report Format
The form of the new audit report is greatly different from the familiar report
under previous standards. It contains significantly expanded discussion of
the auditor’s responsibility as contrasted with management’s. There are
paragraph headings for:
Management’s responsibility for the financial statements
The auditor’s responsibility
The auditor’s opinion
The paragraph covering management’s responsibility is standardized language.
It is important to note that the new standard prohibits any elaboration
in the auditor’s report about management’s responsibility, or any reference
to another document that does so. This might lead users of the report to
the erroneous conclusion that the auditor is expressing assurances about any
representations made by management about its responsibilities.
When it also covers other legal or regulatory requirements, the report
contains headings that separate the report on the financial statements from
the report on the other requirements.