As part of its Attestation Clarity Project, the Auditing Standards Board (ASB) has issued Statement on Auditing Standards (SAS) No. 130, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements (AICPA, Professional Standards, AU-C sec. 940).
Engagements performed under AT section 501 are required to be integrated with an audit of financial statements; as such, the ASB determined that the content of AT section 501 should be moved from the attestation standards into generally accepted auditing standards (GAAS). AT section 501 and the related attestation interpretation will be withdrawn when SAS No. 130 becomes effective (SAS No. 130 is effective for integrated audits for periods ending on or after December 15, 2016). At a later date, the Auditing Standards Board will consider developing an attestation standard addressing examinations of internal control other than internal controls over financial reporting that is integrated with an audit of financial statements.
SAS No. 130 includes the following changes:
–The auditor will be required to examine and report directly on the effectiveness of internal control over financial reporting. There is no longer an option to examine and report on management’s assertion about the effectiveness of internal control over financial reporting.
–The term significant account or disclosure used in AT section 501 has been changed to significant class of transactions, account balance, or disclosure to align with terminology used in existing GAAS and to clarify that the risk factors the auditor is required to evaluate are the same in the audit of internal control over financial reporting as in the audit of the financial statements.
–The SAS allows, as does AT section 501, the auditor to use the work of internal auditors and others in obtaining evidence about the effectiveness of internal control over financial reporting, adapting and applying, as necessary, the requirements of AU-C section 610, including the need for others to apply a systematic and disciplined approach.