QC for an Audit of Financial Statements 8-31-09

QC for an Audit of Financial Statements 8-31-09

-

English
4 Pages
Read
Download
Downloading requires you to have access to the YouScribe library
Learn all about the services we offer

Description

August 31, 2009Ms. Sherry HazelAmerican Institute of Certified Public Accountants1211 Avenue of the AmericasNew York, NY 10036-8775Dear Ms. Hazel:The Audit and Assurance Services Committee of the Illinois CPA Society (“Committee”)is pleased to comment on the proposed Statement on Auditing Standards (SAS) QualityControl for an Audit of Financial Statements. The organization and operating proceduresof the Committee are reflected in the attached Appendix A to this letter. These commentsand recommendations represent the position of the Illinois CPA Society rather than anymembers of the Committee or of the organizations with which such members areassociated.Response to the Specific Issue for Consideration in the Exposure DraftRegarding the ASB’s request that respondent’s provide input as to whether additionalrequirements relating to engagement quality control reviews that apply only to audits ofissuers should be included in the proposed SAS –The Committee does not believe that the final SAS should include additionalrequirements relating to engagement quality reviews applicable to audits ofissuers. As the PCAOB has included all requirements relating to quality reviewsapplicable to audits of issuers, the ASB should continue to focus its attention onaudits of nonissuers and not provide standards that are redundant with thePCAOB.Responses to Specific Changes Resulting from Applying Clarity Conventions andConvergence with the ISA1. The Committee believes ...

Subjects

Informations

Published by
Reads 7
Language English
Report a problem
August 31, 2009
Ms. Sherry Hazel
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775
Dear Ms. Hazel:
The Audit and Assurance Services Committee of the Illinois CPA Society (“Committee”)
is pleased to comment on the proposed Statement on Auditing Standards (SAS)
Quality
Control for an Audit of Financial Statements.
The organization and operating procedures
of the Committee are reflected in the attached Appendix A to this letter. These comments
and recommendations represent the position of the Illinois CPA Society rather than any
members of the Committee or of the organizations with which such members are
associated.
Response to the Specific Issue for Consideration in the Exposure Draft
Regarding the ASB’s request that respondent’s provide input as to whether additional
requirements relating to engagement quality control reviews that apply only to audits of
issuers should be included in the proposed SAS –
The Committee does not believe that the final SAS should include additional
requirements relating to engagement quality reviews applicable to audits of
issuers. As the PCAOB has included all requirements relating to quality reviews
applicable to audits of issuers, the ASB should continue to focus its attention on
audits of nonissuers and not provide standards that are redundant with the
PCAOB.
Responses to Specific Changes Resulting from Applying Clarity Conventions and
Convergence with the ISA
1.
The Committee believes the objectives of the auditor included in the proposed
SAS are appropriate.
2.
The Committee believes the revisions made to converge the existing standards
with ISA 220 are appropriate. However, this convergence has resulted in
unnecessary redundancy with many concepts included in the proposed SQCS No.
7 (redrafted) –
A Firm’s System of Quality Control.
Accordingly, as set forth later
in this response, the Committee recommends deletion of any portion of the SAS
that is unnecessarily redundant with SQCS No. 7, as redrafted.
3.
The Committee believes the differences between the proposed SAS and ISA No.
220 identified in the exhibit, and other language changes, are appropriate.
4.
The Committee believes the considerations for audits of smaller, less complex
entities and governmental entities have been dealt with appropriately.
General Comment
As set forth in No. 2 above, the Committee believes that convergence with ISA 220 has
resulted in unnecessary redundancies with SQCS No. 7, as redrafted. Having such
redundancies causes an auditor excessive time in reading both documents to ensure that
there are no differences or additional requirements. Specifically, the Committee
recommends that the following paragraphs are deleted from the final SAS and replaced
with a reference to the applicable paragraph of SQCS No. 7:
Paragraph 7 – Definitions. Although the definitions have been specifically
modified for audit engagements, such modifications are not deemed necessary in
the SAS. Accordingly, the definitions section should just include a reference to
SQCS No. 7. Further, creation of a master glossary of definitions for all SASs
should be considered.
Paragraph 20 – scope of the engagement quality review is identical to paragraph
40 of SQCS No. 7 and not deemed necessary in the SAS.
Paragraph 24 – documentation of the engagement quality review is identical to
paragraph 44 of SQCS No. 7 and not deemed necessary in the SAS.
Specific Comments
Paragraph 7 – Examples of circumstances where the engagement partner determines that
it is inappropriate for an engagement team to rely on the firm’s system of quality control
should be included in A2 of the Explanatory Material.
Paragraph 11 – The Committee believes there is a contradiction between this paragraph
and paragraph 22 of the Proposed SQCS,
A Firm’s System of Quality Control –
Redrafted,
as it relates to the engagement partner versus firm responsibility. Paragraph 11
of this proposed standard implies that it is the engagement partner’s responsibility to
ensure that the firm is independent. Paragraph 22 of the Proposed SQCS implies it is the
firm’s responsibility. Although, the engagement partner has a role in assuring
independence in an audit, the Committee believes it is ultimately should be the firm’s
responsibility.
Paragraph 14b – The grammar is cumbersome. Consider changing the wording
“enable
an auditor’s report that is appropriate in the circumstances to be issued”
to “
issue an
auditor’s report that is appropriate in the circumstances.”
Paragraph 18c – Consultation: Past guidance required that the nature and scope of
consultations be documented and understood. This guidance has been modified to
conform to ISQC by replacing “understood” with “agreed-upon.” This would imply the
need for a written agreement between the firm and the party being consulted. The
Committee believes the language should be clarified to ensure that informal consultations
are not being discouraged.
Paragraph 20 – if this paragraph is not deleted as recommended in the general comment
above, 20b should be revised to say
reading
the financial statements and the proposed
auditor’s report
, rather than
review of
the financial statements and the proposed
auditor’s report,
to be consistent with SQCS No. 7 and to avoid any confusion with a
review under Statement on Standards for Accounting and Review Services (SSARS).
Paragraph 23 – The overall tone of the proposed SAS has been the requirements of the
engagement partner in an audit of financial statements. This paragraph refers to the
“auditor” and should be changed to “engagement partner” to be consistent with the tone
of the proposed SAS.
Paragraph A25 is not referenced anywhere in the basic SAS. Paragraph 19 of the SAS
should be referenced to paragraph 25.
Paragraph A-29 should also be referenced in paragraph 21 of the SAS.
The Illinois CPA Society appreciates the opportunity to express its opinion on this matter.
We would be pleased to discuss our comments in greater detail if requested.
Sincerely,
Jon Hoffmeister, CPA, MST
Chair, Audit and Assurance Services Committee
Kevin Wydra, CPA
Vice Chair, Audit and Assurance Services Committee
APPENDIX A
ILLINOIS CPA SOCIETY
AUDIT AND ASSURANCE SERVICES COMMITTEE
ORGANIZATION AND OPERATING PROCEDURES
2009 – 2010
The Audit and Assurance Services Committee of the Illinois CPA Society (Committee) is composed
of the following technically qualified, experienced members appointed from public practice and
industry. These members have Committee service ranging from newly appointed to more than 20
years. The Committee is an appointed senior technical committee of the Society and has been
delegated the authority to issue written positions representing the Society on matters regarding the
setting of audit and attestation standards. The Committee’s comments reflect solely the views of the
Committee, and do not purport to represent the views of their business affiliations.
The Committee usually operates by assigning Subcommittees of its members to study and discuss
fully exposure documents proposing additions to or revisions of audit and attestation standards.
The Subcommittee develops a proposed response that is considered, discussed and voted on by
the full Committee. Support by the full Committee then results in the issuance of a formal
response, which at times includes a minority viewpoint.
Current members of the Committee and their business affiliations are as follows:
Public Accounting Firms:
Large:
(national & regional)
Peggy L. Brady, CPA
Neil F. Finn, CPA
William P. Graf, CPA
Jon R. Hoffmeister, CPA
Michael J. Pierce, CPA
Kevin V. Wydra, CPA
McGladrey & Pullen LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
Clifton Gunderson LLP
McGladrey & Pullen LLP
Crowe Horwath LLP
Medium:
(more than 40 employees)
Damitha N. Bandara, CPA
Jennifer E. Deloy, CPA
Sharon J. Gregor, CPA
Stephen R. Panfil, CPA
Blackman Kallick LLP
Frost, Ruttenberg & Rothblatt, P.C.
Selden Fox, Ltd.
Bansley & Kiener LLP
Small:
(less than 40 employees)
James R. Adler, CPA
Scott P. Bailey, CPA
Julian G. Coleman, Jr., CPA
Howard L. Gold, CPA
Loren B. Kramer, CPA
Andrea L. Krueger, CPA
Ludella Lewis
Richard D. Spiegel, CPA
Adler Consulting Ltd.
Bronner Group LLC
Horwich Coleman Levin LLC
Africk Chez P.C.
Kramer Consulting Services, Inc.
Corbett, Duncan & Hubly P.C.
Ludella Lewis & Company
Steinberg Advisors, Ltd.
Industry:
Janis D. Potter, CPA
MTL Insurance Co.
Staff Representative:
Paul E. Pierson, CPA
Illinois CPA Society