Ahava Goldman
Ahava Goldman

Start Preparing Now to Implement AICPA’s Clarified SASs for Year-End 2012 Audits

Do you know how the newly issued Statements on Auditing Standards released under the AICPA’s Clarity Project will affect your firm’s 2012 year-end audits of nonpublic companies?

February 2, 2012
by Ahava Goldman, CPA

Changes to the former Statements on Auditing Standards (SASs) revolved around organization, formatting and language so the substance of the standards largely remains intact. However, audit methodologies will have to be modified and staff training will be necessary. It’s time to get ready for those audits.

The AICPA Auditing Standards Board (ASB) achieved a major milestone in October 2011 when it issued SAS Nos. 122-124, which include more than 40 finalized clarified SASs. SAS 125 was issued in December (two standards are still in process: one on going concern will be issued by fall 2012 and one on internal audit in fall 2013). The overall goal of this landmark, multiyear project was to make the standards easier to read, understand and implement and to converge them with the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAAS) (the clarified SAS on going concern is not being converged with the corresponding ISA at this time).

Following the New Format

The new clarity format organizes guidance into these sections:

  • Introduction. Covers the purpose and scope of the standard.
  • Objective. Clarifies the standard setters’ intentions.
  • Definitions. Explains key terms.
  • Requirements. Defines what the auditor must do to achieve the standard’s objective. Requirements are expressed using the words “must” and “should.”
  • Application and other explanatory materials. Provides additional elaboration and guidance necessary to understand and implement the standard.

In addition, within the standards, particular efforts have been made to address special considerations for either smaller, less complex organizations or for governmental entities.

Another important element of the Clarity Project is the modification of all existing AU sections. Practitioners should be aware that topics formerly associated with some AU numbers may be retitled and reassigned. The ASB has also changed the existing AU section number order that was established in SAS No. 1. All clarified AU sections that have comparable ISAs now follow the ISA number order.

The clarified SASs generally will be effective for audits of financial statements for periods ending on or after December 15, 2012. To prevent confusion between old and new formats, early adoption is not permitted and auditors should continue to comply with current standards until the effective date.

Changes to the Audit Process

While many changes mainly address organization, auditors should be aware of a few significant revisions to some parts of the audit process. For example, the auditor’s report must now include headings before every paragraph to clearly distinguish different report sections. Two new sections have been added to the report: “Management’s Responsibility for the Financial Statements” and “Auditor’s Responsibility.”

Elsewhere, the clarified SAS, Special Considerations -- Audits of Group Financial Statements (including the Work of Component Auditors), provides guidance that makes it easier for auditors to understand and apply Generally Accepted Auditing Standards (GAAS) in audits involving consolidated financial statements or the work of other auditors.

Start Planning Now

The AICPA has developed several resources to help CPAs implement the clarified SASs, including some to educate firm staff. Visit aicpa.org/SASClarity to access these materials, many of which are available for free.

The clarified SASs are available in the online version of AICPA Professional Standards, the first place you can receive the codification of these standards. Early in 2012, the AICPA’s new Clarity Audit Risk Alert will become available and a number of publications and training courses will follow, to assist CPAs with this transition.


Now is the time for CPAs to revisit their audit methodologies and see what changes are needed before the clarified standards become effective. It’s is also a good point to start planning your training to ensure all firm members have time to familiarize themselves with the new standards.”

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Ahava Goldman, CPA, is a senior technical manager in Audit & Attest Standards at the AICPA.