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Newsletter - Spring 2007
Audit Standards Update
Kim Lamplough, Partner, Assurance Services |
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In the last issue of RachlinNews, we announced that the Auditing Standards Board established 10 new standards. These standards significantly change the way annual financial statement audits are performed. Clients will have to supply more information and documentation than in the past, and auditors will place more of an emphasis on internal controls and risk management.
Two of these standards took effect in 2006. These deal with documentation and with communicating internal control-related matters. The remaining eight standards apply to audits of financial statements for periods beginning on or after December 15, 2006. These standards are also known as the Audit Risk Standards, which:
- Require auditors to obtain a more in-depth understanding of the entity involved and its environment, including its internal controls
- Guide auditors in assessing the risks of misstatement caused by either error or fraud
- Improve the link between assessed risks and
the audit procedures responsive to those risks
All of these new standards were put in place to strengthen the effectiveness and quality of audits. As a result, more is asked of the auditor as well as the companies audited. Because of the more extensive procedures required, client audit fees will likely increase.
The Rachlin Assurance division is planning a forum in May, where they will continue to educate its clients and their stakeholders about the effects these new standards will have on financial statement audits. To find out more about the forum, contact Rachlin partner Kim Lamplough, who will be available to help answer questions or provide more information.
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