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

Florescag

Informations

• Publié par: Ardoo
• Nombre de lectures: 7
• Langue: English

Extrait

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