AICPA Issues SAS 112 on Communicating Internal Control Matters
May 26, 2006
On May 26, the AICPA issued Statement on Auditing Standards (SAS) No. 112, Communicating Internal Control Related Matters Identified in an Audit. The new SAS 112 supersedes SAS No. 60, Communication of Internal Control Related Matters Noted in an Audit. The Statement is effective for audits of financial statements for periods ending on or after December 15, 2006 (fiscal 2007 for most higher education institutions).
SAS 112 establishes standards and provides guidance on communicating matters related to an entity’s internal control over financial reporting identified in an audit of financial statements. It is applicable whenever an auditor expresses an opinion on financial statements (including a disclaimer of opinion). In particular, this SAS:
- defines the terms "significant deficiency" and "material weakness";
- provides guidance on evaluating the severity of control deficiencies identified in an audit of financial statements; and
- requires the auditor to communicate, in writing, to management and those charged with governance, significant deficiencies and material weaknesses identified in an audit.
The SAS is considered significant because:
- terms such as "significant deficiency" and "material weakness" are also in the Public Company Accounting Oversight Board Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements, although the definitions in the PCAOB standard are more rigorous; and
- the standard will be considered by the GAO and likely cause changes in the agency's standards, affecting institutions’ A-133 audits and other areas.
NACUBO and PwC will produce a webcast June 22 to help members understand the standard and begin preparation for implementation.
Staff Resource: Sue Menditto, director, accounting policy.
- IRS Releases Final Report on College and University Compliance Project
- NACUBO Seeks Input on Ethics, Fraud, and Controls
- FY13 Implementation Reminder for Independent Institutions
- 2013 Higher Education Accounting Forum
May 19-21, 2013
- CAO and CBO Collaborations: Leveraging Institutional Capacity to Impact Effectiveness
August 5-6, 2013
- 2013 Planning and Budgeting Forum
September 16-17, 2013
- WEBCAST: The Higher Education Accounting Forum Online
Wednesday, May 29, 2013 10:00 AM - 5:00 PM ET
- WEBCAST: Improve Your NFP Audit and Accounting Guide IQ
Wednesday, June 26, 2013 1:00 PM ET
- ON-DEMAND: OD: The Cashless and Paperless Business Office
- ON-DEMAND: Affordable Care Act: Implementation Roadmap for Colleges and Universities
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis