Accounting

New Auditing Standard on Audit Evidence Released

New Auditing Standard on Audit Evidence Released

Statement on Auditing Standards No. 142, Audit Evidence, was issued by the Auditing Standards Board in July 2020.  It is effective for audits of financial statements for periods ending on or after December 15, 2022.  Early adoption is not prohibited.

SAS No. 142 supersedes Section 500, Audit Evidence, of SAS No. 122, Statements on Auditing Standards: Clarification and Recodification and amends a variety of other sections of the codification.

The primary objective of SAS No. 142 is to better explain what comprises audit evidence in a financial statement audit.  It establishes attributes that are taken into account by the auditor when evaluating information to be used as audit evidence, which assists the auditor with maintaining professional skepticism.  The auditor should evaluate information to be used as audit evidence by taking into account the relevance and reliability of the information, including its source.  The auditor should also evaluate whether such information either corroborates or contradicts assertions in the financial statements.  

Information must be sufficiently precise and detailed for the auditor’s purpose.  This includes obtaining audit evidence about the completeness and accuracy of the information, as deemed necessary.  Evaluation may be enhanced through the use of automated tools and techniques (such as audit data analytics), which allows for aggregation or disaggregation of information or comparison of information from multiple sources. 

Any modifications or additions to audit procedures should be made as deemed necessary to resolve inconsistencies in, or doubts about the reliability of, audit evidence.  This includes when evidence is inconsistent between sources or results of other audit procedures.

The auditor has as an ultimate obligation to evaluate information obtained, including the results of audit procedures, to inform the auditor’s overall conclusion about whether sufficient appropriate audit evidence has been obtained to support the auditor’s report reasonable assurance opinion.

 

The content contained in this article is for information purposes only and not tax advice.  You should consult your own tax advisor for tax advice that applies to your particular situation.

Jennifer Louis has more than 25 years of experience in designing high-quality training programs in a variety of technical and soft skills topics necessary for professional and organizational success. In 2003, she founded Emergent Solutions Group, LLC, where she focuses on designing and delivering practical and engaging accounting and auditing training. Jennifer started her career in audit for Deloitte & Touche. She graduated summa cum laude from Marymount University with a BBA in accounting.