AICPA Releases New Standards For Risk Assessment

by Glen Shapiro, LawAndTax-News.com, New York

15 March 2006

Eight new Statements on Auditing Standards recently approved by the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) will be made available this week, the Board announced.

The new statements, SAS No. 104 through SAS No. 111, will be effective for audits of financial statements for periods beginning on or after December 15, 2006, but early adoption is permitted.

Collectively, the Risk Assessment Standards establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement (whether caused by fraud or error) in a non-issuer financial statement audit; design and performance of tailored audit procedures to address assessed risks; audit risk and materiality; planning and supervision; and audit evidence.

“The standards will result in more effective audits as a result of better risk assessments and improved design and performance of audit procedures to respond to the risks,” explained John Fogarty, Chairman of the Auditing Standards Board, continuing:

“These standards will better help auditors focus on those areas where risk of misstatement is the greatest.”

The AICPA revealed that it has put together a comprehensive plan to support and assist members in implementing the new standards, which comprises:

• An audit risk alert, which will be available in March;
• Presentations and discussions at a number of AICPA conferences between now and December 15, 2006, the effective date of the standards;
• Two self-study CPE programs, to be released this summer; and
• An audit guide, including case studies, due out in the fall.

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