The Audit Clarity Project Challenge results is out!
Congratulations to FutureCPA who won the AUD CPA Review System!
We appreciate that FutureCPA analyzes the difference in her own words, mentioning the key points and keeping it relatively short at the same time.
You Can Get Your Own Copy Here
FutureCPA’s Answer On The Difference Between The New And Old Format
The Auditing Standards Board (ASB) has redrafted almost all of the auditing sections in Codification of Statements on Auditing Standards (contained in AICPA Professional Standards) and now reflects the ASB’s established clarity drafting conventions.
What are the key changes involved in the Clarity Project?
- Unqualified report for Non-public companies/non issuers changed to Unmodified report.
- Explanatory paragraphs changed to Emphasis-of-Matter and Other Matter paragraphs.
- Division of Responsibility changed to Group Financial Statements.
- Principal Auditor changed to Group Engagement Partner.
- A separate Subheading will be required for each portion of the report.
- Report for public companies/issuers is similar to old audit report of 3 paragraphs.
- Requirement paragraphs will be separated from the application text.
- New Materiality guidelines are implemented.
- PCAOB standards are also changing.
What are the improvements to the generally accepted auditing standards (GAAS)?
- The objectives of the auditor
- The requirements described for auditor compliance with the auditing standards.
Why are the objectives of the changes?
- To make auditing standards easier to read, understand & apply.
- To converge the standards of Auditing Standards Board (ASB) with the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB).
What is the new clarity format?
- The new clarity format includes an introduction, objective, definitions, requirements, application and other explanatory materials.
Which audit areas are affected?
- Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards
- Terms of Engagement
- Special Purpose Financial Statements
- Audits of Group Financial Statements (Including the Work of Component Auditors)
Which audit areas are not affected?
- Audit documentation
- Auditor’s communication with those charged with governance
- Risk assessment standards
- External confirmation
- Analytical procedures
- Audit sampling
- Auditing accounting estimates
- Written representations
- Subsequent events
- Consideration of omitted procedures after the report release date
When does Clarity Project take effect on audits?
- Effective for audits ending on or after December 15, 2012 and will replace existing Statements on Auditing Standards (SASs) in 2014.
When does Clarity Project take effect on AUD section of CPA exam?
- From July/August testing window 2013.
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