ASB and the Clarity Project

ASB and the Clarity Project

The AICPA Auditing Standards Board (ASB) has undertaken a “Clarity Project,” This project has as its objective to make U.S. generally accepted auditing standards (GAAS) easier to read, understand, and apply. The ASB first considered this project in 2004 given the creation of the Public Company Accounting Oversight Board (PCAOB) and the increasingly widespread acceptance of International Standards on Auditing (ISAs).

Subsequently the ASB developed a plan to converge U.S. GAAS with the ISAs while at the same time avoiding unnecessary conflict with PCAOB standards. You’ve no doubt noticed that recent exposure drafts of the ASB are redrafts of existing SASs and contain references to ISAs, which in many cases are used as a basis for the proposed auditing standard.

As a result of feedback received from its discussion paper, “Improving the Clarity of ASB Standards” the ASB established clarity drafting conventions. This list of drafting conventions may help you understand how the auditing standards are structured.

Clarity Drafting Conventions

The clarity drafting conventions will be applied to all standards issued by the ASB after January 2008. They are:

Establishing objectives for each of the standards.
Including a definitions section, where relevant, in each standard.
Separating requirements from application and other explanatory material.
Numbering application and other explanatory material paragraphs using an A prefix and presenting them in a separate section (following the requirements section).
Using formatting techniques, such as bulleted lists, to enhance readability.
Special considerations relevant to audits of smaller, less complex entities.
Special considerations relevant to audits of governmental audits.

Effective date

The effective date is expected to apply to audits of financial statements for periods beginning no earlier than December 15, 2010. This date will be amended to a later date if necessary.

Upon the issuance of all clarified SASs, one SAS will be issued containing all clarified SASs in codified format.

Keep up with what's happening with auditing standards at cpafirmsupport.com.