SAS No. 117 Compliance Audits

The AICPA Auditing Standards Board (ASB) issued SAS No. 117, Compliance Audits in December 2009. It is effective for compliance audits for fiscal periods ending on or after June 15, 2010. Early application is permitted.

As you know governments frequently establish governmental audit requirements for entities to undergo an audit of their compliance with applicable compliance requirements. The ASB issued this SAS to address such governmental audit requirements. It supersedes SAS No. 74, Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance. It was primarily developed in response to the results of a federal study on the quality of audits performed under Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations (also referred to as single audits), which showed that improvements were needed in many areas.

SAS No. 117

• Establishes standards and provides guidance on performing and reporting (in accordance with GAAS, Government Auditing Standards, and a governmental audit requirement that requires an auditor to express an opinion on compliance) on an audit of an entity’s compliance with applicable compliance requirements of a governmental audit requirement. (For example, single audits and audits performed under the U.S. Department of Housing and Urban Development (HUD) Consolidated Audit Guide for Audits of HUD Programs.)


• Updates SAS No. 74 to reflect changes in the compliance audit environment and incorporates the risk assessment standards.


• Requires the auditor to adapt and apply the AU sections of AICPA Professional Standards to a compliance audit and provides guidance on how to do so.


• Identifies the AU sections that are not applicable to a compliance audit,


• Defines terms related to compliance audits and used in the SAS, and


• Identifies the elements to be included in an auditor’s report on a compliance audit.