Statement of Auditing Standards (SAS)

SAS Auditing Standards Auditing Practices Board (APB) Financial Statements International Standards on Auditing (ISA)
A series of statements issued by the Auditing Practices Board (APB) detailing basic principles and essential procedures in auditing, applicable to audits of financial statements for periods commencing before 15 December 2004.
On this page

Definition

The Statement of Auditing Standards (SAS) refers to a series of statements issued by the Auditing Practices Board (APB), which delineated fundamental principles and essential procedures in auditing. These standards were mandatory for auditors in conducting audits of financial statements starting from their respective issuance until periods commencing before 15 December 2004. From that date onwards, auditors in the UK and Ireland are required to apply the International Standards on Auditing (ISAs).

Examples

  1. SAS No. 1 provided guidelines and requirements for the report of an independent auditor and established the standard reporting format.
  2. SAS No. 99 dealt with consideration of fraud in a financial statement audit, providing guidance on how auditors should identify and respond to fraudulent activity.

Frequently Asked Questions

Q1: What does SAS stand for in auditing? A1: SAS stands for Statement of Auditing Standards.

Q2: Who issued the SAS? A2: SAS were issued by the Auditing Practices Board (APB).

Q3: Are SAS still in use? A3: SAS were applied to audits of financial statements for periods commencing before 15 December 2004. For periods thereafter, International Standards on Auditing (ISAs) are applied in the UK and Ireland.

Q4: Why were SAS replaced by ISAs? A4: SAS were replaced by ISAs to harmonize auditing standards internationally, ensuring consistency and enhancing the quality of audits across borders.

Q5: How are SAS different from ISAs? A5: While both SAS and ISAs provide guiding principles and procedures for auditors, ISAs are international standards that aim to standardize auditing practices globally. SAS were specific to the UK and Ireland before the adoption of ISAs.

  • Auditing Practices Board (APB): The body responsible for issuing SAS and setting standards for auditing practices in the UK and Ireland prior to the shift to ISAs.
  • International Standards on Auditing (ISAs): A set of standards designed to improve the quality and uniformity of practices by auditors globally, adopted in the UK and Ireland from 15 December 2004.
  • Financial Statements: Formal records of the financial activities and position of a business, person, or other entity.

Online Resources

Suggested Books for Further Studies

  • “Auditing: A Risk-Based Approach to Conducting a Quality Audit” by Karla M. Johnstone, Audrey A. Gramling, Larry E. Rittenberg
  • “Principles of Auditing & Other Assurance Services” by Ray Whittington, Kurt Pany
  • “Auditing and Assurance Services: An Integrated Approach” by Alvin A. Arens, Randal J. Elder, Mark S. Beasley
  • “Audit and Assurance Essentials for Professional Accountancy Exams” by Katharine Bagshaw

Accounting Basics: “Statement of Auditing Standards (SAS)” Fundamentals Quiz

### What does SAS stand for in auditing? - [x] Statement of Auditing Standards - [ ] Standardized Auditing Services - [ ] Statutory Audit Standards - [ ] Standards and Auditing Services > **Explanation:** SAS stands for Statement of Auditing Standards, a series of guidelines issued by the Auditing Practices Board. ### Who was responsible for issuing SAS? - [ ] Financial Standards Board (FSB) - [x] Auditing Practices Board (APB) - [ ] International Accounting Standards Board (IASB) - [ ] Public Oversight Board (POB) > **Explanation:** The Auditing Practices Board (APB) issued the Statements of Auditing Standards (SAS). ### SAS applied to audits of financial statements for periods commencing before which date? - [ ] 1 January 2000 - [ ] 1 November 2004 - [x] 15 December 2004 - [ ] 31 December 2005 > **Explanation:** SAS applied to audits of financial statements for periods commencing before 15 December 2004. ### What standards replaced SAS in the UK and Ireland? - [ ] Generally Accepted Accounting Principles (GAAP) - [ ] Public Company Accounting Oversight Board (PCAOB) Standards - [x] International Standards on Auditing (ISAs) - [ ] American Institute of CPAs (AICPA) Standards > **Explanation:** International Standards on Auditing (ISAs) replaced SAS in the UK and Ireland for periods commencing on or after 15 December 2004. ### Why were ISAs adopted in place of SAS? - [x] To harmonize auditing standards internationally - [ ] To reduce the complexity of auditing standards - [ ] To comply with new government regulations - [ ] To provide more detailed guidelines > **Explanation:** ISAs were adopted to harmonize auditing standards internationally, ensuring consistency and enhancing the quality of audits. ### Which organization benefits from the adoption of ISAs? - [ ] Local small businesses only - [ ] Individual account holders - [x] Global auditing firms and multinational corporations - [ ] Sole proprietorships > **Explanation:** Global auditing firms and multinational corporations benefit most from the adoption of ISAs as it allows for standardized practices across borders. ### What was the focus of SAS No. 99? - [x] Consideration of fraud in a financial statement audit - [ ] Enhanced reporting formats - [ ] New tax compliance procedures - [ ] Employee benefit plan auditing > **Explanation:** SAS No. 99 dealt with the consideration of fraud in a financial statement audit, providing guidance on identifying and responding to potential fraudulent activities. ### Who enforces the compliance with ISAs? - [ ] Financial Standards Board (FSB) - [ ] American Institute of CPAs (AICPA) - [ ] Public Oversight Board (POB) - [x] Financial Reporting Council (FRC) > **Explanation:** Compliance with ISAs, especially in the UK and Ireland, is enforced by the Financial Reporting Council (FRC). ### What significant change occurred in the UK and Irish auditing practices after 15 December 2004? - [x] Shift from SAS to ISAs - [ ] Introduction of new national standards - [ ] Simplification of audit procedures - [ ] Exemption of small companies from audits > **Explanation:** The significant change was the shift from SAS to ISAs for audits of financial statements in the UK and Ireland. ### How do SAS and ISAs essentially benefit the auditing process? - [ ] By reducing audit time - [x] By providing a consistent framework and improving audit quality - [ ] By minimizing auditor responsibility - [ ] By increasing regulatory oversight > **Explanation:** Both SAS and ISAs provide a consistent framework of principles and procedures, thereby improving the quality of audits and ensuring compliance.

Thank you for delving into the intricacies of auditing standards with a focus on SAS. Continue advancing your knowledge and staying updated with the latest standards and practices.

Tuesday, August 6, 2024
Statement of Cash Flow
Statement of Affairs
Auditing Standards January 1, 1
Auditors' Report January 1, 1
Expected Error January 1, 1
Letter of Representation January 1, 1

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.