Authored By: Dustin Wood, CPA. Dustin has been with the firm 8 years and is the audit manager here at Cook Martin Poulson, PC. He specializes in financial statement services and preparation of tax-exempt information returns.
Clarified Auditing Standards
Clarified Auditing Standards have been issued by the AICPA Auditing Standards Board (ASB). There were only three standards issued that replace all existing auditing standards, but they contain a significant amount of detail in each standard. The standards are effective for periods ending after December 15, 2012. The most significant change stemming from issuance of the standards is revised wording for audit reports, engagement letters, and representation letters. Audit reports will now have sub-headings for each section of the report. The standards issued also require more communication between auditors in a group audit setting where auditors of a group use the work of other auditors.
Legal Representation Letters
Based on revisions to audit standards, there will not be as much emphasis placed on legal representation letters unless there is risk for an audit client (such as legal fees paid or litigation issues).
Comprehensive Income Presentation
According to Accounting Standards Update (ASU) No. 2011-12, details for changes in comprehensive income can no longer be presented as part of an equity statement and must be shown in a separate statement or as part of an income statement. This change is effective for periods ending after December 15, 2012.
Yellow Book Audits (subject to Government Auditing Standards)
Organizations must have management who can take responsibility for financial statements for auditors to maintain their independence. Management must also have the skills, knowledge, and experience to be able to accept the financial statements.