Definition
Statement on Auditing Standards (SAS) refers to any of the formal statements that outline the accepted auditing standards in the United States. These statements are issued by the Auditing Standards Board (ASB), which is part of the American Institute of Certified Public Accountants (AICPA). The SAS provides guidance to auditors on conducting audits of financial statements in conformity with generally accepted auditing standards (GAAS). If auditors deviate from SAS principles, they must provide an explanation in their audit reports.
Examples
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SAS No. 122 - This standard provides guidance for auditors on communicating with audit committees regarding significant findings from the audit.
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SAS No. 134 - Establishes guidelines on auditor’s reporting and amendments to SAS No. 122, particularly focusing on the format and content of audit reports.
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SAS No. 142 - Specifies guidelines for auditors when considering evidence necessary for conducting the audit.
Frequently Asked Questions (FAQs)
What is the purpose of SAS in auditing?
The primary purpose of SAS is to ensure that auditors are following a consistent and accepted set of auditing standards when they are conducting financial statement audits. This provides a framework for maintaining the quality and reliability of audits.
Who issues the SAS?
The Statement on Auditing Standards (SAS) is issued by the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA).
Are auditors required to follow SAS?
Yes, auditors are required to follow the guidance provided in the SAS. If they deviate from these standards, they must explain the reasons for such deviations in their audit reports.
How often are SAS updated or revised?
The Auditing Standards Board (ASB) periodically updates the SAS to reflect changes in the auditing profession, such as new auditing techniques, tools, and regulations.
What happens if an auditor does not follow an SAS without explanation?
Failure to follow SAS without proper explanation could result in disciplinary actions from regulatory bodies, damage to professional reputation, and legal consequences.
Related Terms
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Generally Accepted Auditing Standards (GAAS): A set of systematic guidelines used by auditors when conducting audits on companies’ financial statements.
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Audit Report: A formal opinion or disclaimer, issued by an auditor as a result of an audit or evaluation performed on an entity’s books and records or on a specific entity situation.
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American Institute of Certified Public Accountants (AICPA): A professional organization for Certified Public Accountants (CPAs) in the United States.
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Auditing Standards Board (ASB): The AICPA’s senior technical committee that sets auditing standards.
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Compliance Audit: An audit designed to determine whether organizations are following specific laws, regulations, policies, or contract provisions.
Online References
Suggested Books for Further Studies
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“Auditing and Assurance Services: An Integrated Approach” by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley.
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“Principles of Auditing & Other Assurance Services” by Kurt Pany and Ray Whittington.
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“Auditing: A Risk-Based Approach to Conducting a Quality Audit” by Karla M. Johnstone, Audrey A. Gramling, and Larry E. Rittenberg.
Accounting Basics: “Statement on Auditing Standards” Fundamentals Quiz
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