Clarifying the Auditing Standards
Significant changes and planning steps related to the Clarity Project of the Auditing Standards Board (ASB).
May 17, 2010
The Auditing Standards Board’s (ASB) “Clarity Project” is going to do more than just reformat and reorganize existing U.S. audit standards, it will converge them with the International Standards on Auditing (ISAs). Small firm practitioners will need to understand and implement these revised standards as businesses of all sizes become more global in their operations.
What Is the Clarity Project?
The Clarity Project is a multi-year effort undertaken by the ASB to reformat and redraft all of the existing U.S. auditing standards for nonpublic companies while converging them with International Standards on Auditing. The goal is to make U.S. audit standards easier to use.
What Is the Effective Date?
All but six of the clarified AU sections are expected to apply to audits of financial statements for periods beginning on or after December 15, 2010. This date is tentative and can be changed by the ASB if needed, but early application is prohibited. Therefore, similar to the Financial Accounting Standards Board (FASB) Codification project, you can expect an entirely new body of authoritative U.S. auditing literature for nonpublic companies beginning in 2011.
The reformatting and redrafting of the auditing standards are being done with the following guidelines in mind:
In many cases, the reformatting and redrafting won’t change existing practice. However, in instances where the existing U.S. standard differs significantly from its international counterpart, major changes may be needed to bring the two into agreement.
Based on clarified standards that have been exposed by the ASB to date, here are the areas where significant changes to U.S. standards are expected:
In addition, possibly the most significant changes from a training standpoint will relate to the following:
Planning for Implementation
You need to plan now for the coming changes. Consider doing the following:
Planning ahead will ensure a smooth transition to the revised standards.
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