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[IAASB])23 and the International Federation of Accountants (IFAC) to develop
harmonized accounting and auditing standards. The objective of the initiatives is
to enable a company that has complied with these international standards in its eq-
uity securities offering documents, to raise capital in a global capital marketplace.
In response to the demand for international auditing standards, the IFAC es-
tablished an International Auditing and Assurance Standards Board. This board
has issued a number of pronouncements and related statements, as shown in Ex-
hibit 5.6. Although such standards are adopted on a voluntary basis, the goal of

22
International Federation of Accountants, 1992 Annual Report, p. 3.
23
See American Institute of Certified Public Accountants, Professional Standards, Vol. 2, Sec. AC
9000 for the International Accounting Standards, New York, June 1, 2003.
190 Rules of the Road—Auditing and Related Accounting Standards



Exhibit 5.3 Summary of Significant Auditing Standards

Auditing Pronouncements Topical Area

Statements on Auditing Standards:
No. 12, “Inquiry of a Client’s Lawyer Accounting for contingencies (see SFAS
Concerning Litigation, Claims, and No. 5 and Interpretation No. 14)
Assessments”
No. 22, “Planning and Supervision” Audit plans and execution
No. 31, “Evidential Matter” Management’s assertions
No. 45, “Omnibus Statement on Auditing Related party disclosures (see SFAS
Standards—1983” No. 57)
No. 47, “Audit Risk and Materiality in Inherent and control risks (see SFAC
Conducting an Audit” No. 2)
No. 50, “Reports on the Application of Other auditors’ opinions
Accounting Principles”
No. 54, “Illegal Acts by Clients” Violations of laws and regulations that
have a material direct effect on finan-
cial statements
No. 55, “Consideration of the Internal Quality of the control environment and
Control Structure in a Financial level of control risk
Statement Audit”
No. 56, “Analytical Procedures” Analysis and evaluation of financial
statement information
No. 57, “Auditing Accounting Estimates” Reasonableness of estimates
No. 58, “Reports on Audited Financial Types of auditor’s reports
Statements”
No. 59, “The Auditor’s Consideration of Violation of the going-concern
an Entity’s Ability to Continue as a assumption
Going Concern”
No. 60, “Communication of Control- Reportable conditions (deficiencies in the
Structure Related Matters Noted in internal control structure) as noted in
an Audit” the management letter
No. 61, “Communication with Audit Selection of significant accounting
Committees” policies and discussion of the auditor’s
disagreement with management
No. 62, “Special Reports” Attestation of other historical financial
information
No. 65, “The Auditor’s Consideration of Internal control and the quality of the
the Internal Audit Function in an Audit internal audit function
of Financial Statements”
No. 72, “Letters for Underwriters and Comfort letters to investment banking
Certain Other Requesting Parties” firms
(See also SAS No. 76 and No. 86 for
amendments.)
No. 73, “Using the Work of a Specialist” Expert opinions (e.g., environmental
liabilities)
No. 78, “Consideration of Internal Control Revises the definition and description of
in a Financial Statement Audit: An internal control
Amendment to SAS No. 55”
No. 79, “Amendment to SAS No. 58, Eliminated the requirement that auditors
Reports on Audited Financial modify their reports for a significant
Statements” uncertainty
International Auditing Standards 191



Auditing Pronouncements Topical Area

No. 83, “Establishing an Understanding Communicates the objectives of the
with the Client” engagement, responsibilities of man-
agement and the auditors, and any
limitations of the engagement
No. 84, “Communications Between Auditor changes (SEC 8-K Report)
Predecessor and Successor Auditors”
No. 85, “Management Representations” Audit evidence acknowledging manage-
ment’s responsibility for the financial
statements
No. 87, “Restricting the Use of an Auditor’s reports intended only for use by
Auditor’s Report” certain parties
No. 89, “Audit Adjustments” Acknowledges to the auditors that the
effects of any uncorrected misstate-
ments brought to management by the
auditors are not material, both individu-
ally and in the aggregate. Communi-
cates the aforementioned misstatements
to the audit committee.
No. 90, “Audit Committee Discussions about the quality, not just the
Communications” acceptability, of accounting principles
for financial reporting as well as com-
munications of matters related to in-
terim financial information.
No. 92, “Auditing Derivative Instruments, Auditing financial statement assertions
Hedging Activities, and Investments in about derivative instruments, hedging
Securities” activities, and investment securities.
(see SFAS No. 133)
No. 93, “Omnibus Statement on Auditing Withdraws SAS No. 75; amends SAS
Standards—2000” No. 58; amends SAS No. 84.
No. 94, “The Effect of Information Tech- The effect of IT on internal control and
nology on the Auditor’s Consideration assessment of control risk.
of Internal Control in a Financial
Statement Audit”
No. 95, “Generally Accepted Auditing Establishes an authoritative hierarchy for
Standards” GAAS
No. 96, “Audit Documentation” Revises SAS No. 41, “Working Papers,”
and requires greater audit
documentation.
No. 97, “Amendment to SAS No. 50, Prohibits an accountant from providing a
Reports on the Application of written report on the application of
Accounting Principles” accounting principles not involving
facts and circumstances of a specific
entity
No. 98, “Omnibus SAS—2000” Provides clarifying guidance to SAS Nos.
95, 25, 47, 70, 58, 8, 52, 29, 1.
No. 99, “Consideration of Fraud in a Revises SAS No. 82, “Consideration of
Financial Statement Audit” Fraud in a Financial Statement Audit”
assessing the risk of material misstate-
ment of the financial statements


(continued)
192 Rules of the Road—Auditing and Related Accounting Standards



Exhibit 5.3 (Continued)

Auditing Pronouncements Topical Area


No. 100, “Interim Financial Information” Revises SAS No. 71, “Interim Financial
Information Quarterly Reports—SEC
10Q Reports” (see APB No. 28)
No. 101, “Auditing Fair Value Accounting basis for measurement or
Measurements and Disclosures” disclosure of a financial statement item
is fair value.

Note: The Auditing Standards Board has rescinded SAS No. 21 “Segment Information.” The Board’s
Audit Issues Task Force has issued an interpretation “Applying Audit Procedures to Segment
Disclosures in Financial Statements” of SAS No. 31, “Evidential Matter.” Also see SAS No. 86,
“Amendment to SAS No. 72, Letters for Underwriters and Certain Other Requesting Parties.”




Exhibit 5.4 Standards for Attestation Engagements
General Standards
1. The engagement shall be performed by a practitioner having adequate technical
training and proficiency in the attest function.
2. The engagement shall be performed by a practitioner having adequate knowledge in
the subject matter.
3. The practitioner shall perform the engagement only if he or she has reason to believe
that the subject matter is capable of evaluation or measurement against criteria stan-
dards or benchmarks that are available to users.
4. In all matters relating to the engagement, an independence in mental attitude shall be
maintained by the practitioner.
5. Due professional care shall be exercised in the performance of the engagement.
Standards of Fieldwork
1. The work shall be adequately planned and assistants, if any, shall be properly supervised.
2. Sufficient evidence shall be obtained to provide a reasonable basis for the conclusion
that is expressed in the report.
Standards of Reporting
1. The report shall identify the subject matter or the assertion being reported on and
state the character of the engagement.
2. The report shall state the practitioner’s conclusion about the subject matter or the
assertion based on the criteria against which the subject matter was measured.
3. The report shall state all of the practitioner’s significant reservations about the
engagement.
4. The report on an engagement to evaluate subject matter that has been prepared based
on agreed-upon criteria or an assertion related thereto or on an engagement to apply
agreed-upon procedures should contain a statement restricting its use to the parties
who have agreed upon such criteria or procedures.

Source: Statement on Standards for Attestation Engagements No. 9, “Amendments to Statement on
Standards for Attestation Engagements Nos. 1, 2, and 3” (New York: AICPA, 1999), p. 2. Reprinted
with permission. Copyright 1999 by The American Institute of Certified Public Accountants, Inc.
International Auditing Standards 193



Exhibit 5.5 Summary of Significant Standards for Attestation Engagements

Statements on Standards for Attestation
Engagements Topical Area

Codification of “Attestation Standards” Framework for attestation
SSAE No. 1 engagements
Codification of “Attest Services Related to Part of a management
SSAE No. 1 MAS Engagements” advisory services
engagement
Codification of “Statements on Standards for Financial information about
SSAE No. 1 Accountants’ Services on the company’s expected
Prospective Financial Information, financial position, results
Financial Information, Financial of operations, and cash
Forecasts and Projections” flows
Codification of “Reporting on Pro Forma Pro forma adjustments
SSAE No. 1 Financial Information” derived from audited or
unaudited historical
financial statements
SSAE No. 2 “Reporting on an Entity’s Internal Management’s assertion
Control Structure over Financial about the effectiveness
Reporting” of internal control
environment
SSAE No. 3 “Compliance Attestation” Management’s assertion on
compliance with speci-
fied laws and regulations
SSAE No. 4 “Agreed-upon Procedures Used for engagements other
Engagements” than SAS No. 75
engagements
SSAE No. 5 “Amendment to SSAE No. 1” Working papers
SSAE No. 6 “Reporting on an Entity’s Internal Internal control
Control Over Financial Reporting:
An Amendment to SSAE No. 2”
SSAE No. 7 “Establishing an Understanding Communicates the objec-
with the Client” ives of the engagement
SSAE No. 8 “Management’s Discussion and Disclosure and compliance
Analysis” with SEC rules
SSAE No. 9 “Amendments to SSAE Nos. 1,
2, and 3”
SSAE No. 10 “Attestation Standards: Revision Codification of SSAE
and Recodification” Nos. 1–9
SSAE No. 11 “Audit Documentation” Renames working papers
SSAE No. 12 “Amendment to SSAE 10”
194 Rules of the Road—Auditing and Related Accounting Standards



Exhibit 5.6 International Auditing Pronouncements

International Standards on Auditing
AU International Standards on Auditing—Introduction
AU 8000 International Standards on Auditing
8012—Preface to International Standards on Auditing and Related Services
8020—Glossary of Terms
8025—IT Glossary of Terms
8100—Assurance Engagements
8120—Framework of International Standards on Auditing
8200—Objective and General Principles Governing on Audit of Finan-
cial Statements
8210—Terms of Audit Engagements
8220—Quality Control for Audit Work
8230—Documentation
8240—The Auditor’s Responsibility to Consider Fraud and Error in an
Audit of Financial Statements
8240A—Fraud and Error
8250—Consideration of Laws and Regulations in an Audit of Financial
Statements
8260—Communications of Audit Matters with those Charged with
Governance
8300—Planning
8310—Knowledge of the Business
8320—Audit Materiality
8400—Risk Assessments and Internal Control
8401—Auditing in a Computer Information Systems Environment
8402—Audit Considerations Relating to Entities Using Service
Organizations
8500—Audit Evidence
8501—Audit Evidence—Additional Considerations for Specific Items
8505—External Confirmations
8510—Initial Engagements—Opening Balances
8520—Analytical Procedures
8530—Audit Sampling and Other Selective Testing Procedures

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