The purpose of the Auditing Standard Board’s (ASB) clarity and convergence project is to clarify and converge ASB audit, attest, and quality control standards with those of the International Auditing and Assurance Standards Board (IAASB). In order to clarify the standards and make them easier to read and apply, drafting conventions were adopted by the ASB. The convergence portion of the project involves using the IAASB standards as a base. Changes to the IAASB standards are made when the ASB decides to retain an auditor performance or reporting requirement that was included in the extant guidance but not in the IAASB standard, to reflect U.S. laws or regulations, or to replace IAASB terminology with terminology commonly used in the U.S. To date, 37 Statements on Auditing Standards (SAS) have been finalized, but not issued. These 37 SASs are expected to be issued in the second half of 2011 as one SAS that is codified in AU sections. The effective date for all 37 SASs is for audits of financial statements for periods ending on or after December 15, 2012.
Five clarified SASs (117–121) have already been issued. The effective date of SAS No. 117, Compliance Audits, is for compliance audits for fiscal periods ending on or after June 15, 2010. The effective date of SAS No. 118, Other Information in Documents Containing Audited Financial Statements, SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole, and SAS No. 120, Required Supplementary Information, is for audits of financial statements for periods beginning on or after December 15, 2010. SAS No. 121, Revised Applicability of Statement on Auditing Standards No. 100, Interim Financial Information, is effective for reviews of interim financial information for periods beginning after December 15, 2011. Early application is permitted for SAS Nos. 117–121.
The ASB has also begun to clarify Statements on Standards for Attestation Engagements (SSAEs) to converge with the IAASB’s International Standards on Assurance Engagements (ISAEs). The ASB plans to issue SSAE No. 16, Reporting on Controls at a Service Organization, next month. SSAE No. 16 will be effective for service auditors’ reports for periods ending on or after June 15, 2011.
The ASB has also clarified Statement on Quality Control Standards (SQCS) No. 7, A Firm’s System of Quality Control, and reissued it as SQCS No. 8, A Firm’s System of Quality Control (Redrafted). SQCS No. 8 is effective as of January 1, 2012.
Additional information about the ASB’s Clarity and Convergence Project is available on the AICPA’s Audit and Attest Standards Website.