Audit Quality and Effectiveness
By: Dennis Gardiner, Partner | email
Recent developments in the auditing industry have required us to change some of our procedures for the auditing of financial statements for the year ended December 31st, 2007. The Auditing Standards Board (ASB) has issued a series of eight new Statements on Auditing Standards (SAS), which are collectively referred to as the Risk Assessment Standards.
The purpose of these new Statements is to establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement (whether caused by error or fraud) in a financial statement audit. While the primary objective of these new statements is to enhance how an auditor applies the audit risk model in practice, we anticipate that the changes will result in an increased effort by both the auditing firm and the business being audited.
These new standards were undertaken in response to recommendations to the ASB made by the Public Oversight Board’s Panel on Audit Effectiveness. The development of these SAS’s was influenced by the major corporate failures of the past several years which weakened the public’s confidence in the effectiveness of audits and led to an intense scrutiny of the work of auditors.
During this year’s audit, as well as in preparation for next year’s audit, we will continue to communicate expected changes in the audit process and ways in which you and your staff can assist in making the audit process as efficient as possible. For more information on how the new Statements affect your business, and ways in which we can work together to make your audit more efficient based on these new Statements, feel free to contact us and we will be pleased to speak with you.
- More in-depth understanding of the entity, its environment, controls and risk mitigation.
- More rigorous assessments of the potential risk of financial statement misstatements.
- Improved linkage between the auditor’s assessed risks and response to those risks.