AICPA Approves New Risk Assessment Auditing Standards
February 24, 2006
The Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) approved eight new Statements on Auditing Standards on February 22. The new statements, SAS No. 104 through SAS No. 111 (collectively referred to as the Risk Assessment Auditing Standards), establish standards and provide guidance concerning:
- the auditor’s assessment of the risks of material misstatement 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 are applicable to non-issuer entities like colleges and universities. The purpose of the standards is to enhance the connection between risk of misstatement and audit procedures and to help auditors focus on areas where risk of misstatement is greatest. The standards are effective for audits of financial statements for periods beginning on or after December 15, 2006 – which means FY08 for the vast majority of higher education institutions.
AICPA has put together a comprehensive plan to support and assist with implementation. Additional information is available on the AICPA Web site. NACUBO will monitor the impact and provide recommendations to the higher education community. We would like to hear from members; contact Sue Menditto, director, accounting policy, with your thoughts, comments, and questions.
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