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VSCPA A&A Committee Offers Comment on AICPA ASB's Proposal on Integrated Audits

 

VSCPA A&A Committee Offers Comment on AICPA's Proposal on Integrated Audits

Dec. 9, 2014

AICPA Auditing Standards Board
Attn: Ms. Sherry Hazel
American Institute of Certified Public Accountants, Inc.
New York, NY 10036-8775 

Submitted via email to [email protected]

Re: Proposed Statement on Auditing Standards, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements

Dear Ms. Hazel:

The Virginia Society of CPAs (VSCPA) Accounting and Auditing Advisory Committee has reviewed the proposed Exposure Draft (ED), An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements, issued by the American Institute of Certified Public Accountants Auditing Standards Board (ASB). The VSCPA is a leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. VSCPA membership consists of more than 11,000 individual members who actively work in public accounting, private industry, government and education. We appreciate the work the ASB has undertaken on this effort and the opportunity to respond to the ED.

In general, the VSCPA agrees regarding the proposed move from the attestation standards to a specific audit standard based on how the practice has evolved over the recent past. Incorporating the 2013 Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework and clarifying definitions and terminology are also supported by the VSCPA. The VSCPA has developed more specific responses to the questions posed by the ASB in the ED. Our responses are as follows:

  1. Are respondents aware of any unintended consequences that would result from moving the content of extant AT section 501 from the attestation standards into GAAS?

    The VSCPA discussed the impact of the ED, including potential unintended consequences. The VSCPA believes clearly stating that an audit of internal control over financial reporting is NOT a standard requirement of an audit of financial statements under Generally Accepted Auditing Standards (GAAS) would add clarity. While this may be a small clarification, it will provide a significant benefit for any parties that may misinterpret the proposed guidance.

  2. Do respondents agree with the approach the ASB has taken in proposing a separate standalone SAS instead of addressing an integrated audit in each relevant existing AU-C section?

    The VSCPA agrees that issuing guidance within the audit standards is an improvement versus issuing guidance under the attestation standards. One common source for guidance on An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements will provide ease of access for those who will provide such services and avoid confusion for the many that will not be involved in such audits.

  3. Do the respondents agree with the approach the ASB has adopted relating to the 2013 COSO framework?

    The VSCPA agrees that utilizing the 2013 COSO framework is the most effective approach. It is widely known and used by varying entities. The draft standard also provides guidance and flexibility for auditors when entities have implemented other frameworks.

  4. Does the defined term significant class of transactions, account balance, or disclosure have the effect of better aligning terminology with minimal impact on practice?

The VSCPA agrees that the defined term significant class of transactions, account balance, or disclosure will improve alignment of terminology with other existing GAAS.

Other Observations:

  • Paragraph 26, Control Environment, the final reference at the bottom of paragraph 26 has an error message as follows: (Ref: par. Error! Reference source not found.).
  • Paragraph 40, Evaluating Design Effectiveness, the reference at the bottom of paragraph 40 has an error message as follows: (Ref: par. Error! Reference source not found.).

Again, the VSCPA appreciates the opportunity to respond to this ED. Please direct any questions or concerns to VSCPA Government Affairs Director Emily Walker at [email protected] or (804) 612-9428.

Sincerely, 
Charles M. Valadez, CPA, CGMA, CITP
Chair  

2014–15 VSCPA Accounting & Auditing Advisory Committee
Charles Valadez, CPA — Chair |
Joshua Keene, CPA — Vice Chair
Michael Cahill, CPA
Mitchell Hartson Jr., CPA
Staci Henshaw, CPA
James Nesbitt, CPA
Brent Simer, CPA

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