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A88284 1 (2009-05-04)

handle is hein.gao/gaobadvug0001 and id is 1 raw text is: 


   I
   GA 0
T M   WAccountability * Integrity * Reliability
United States Government Accountability Office
Washington, DC 20548



         May 4, 2009

         Ms. Sharon Macey
         Audit and Attest Standards
         American Institute of Certified Public Accountants
         1211 Avenue of the Americas
         New York, New York 10036-8775

         Subject: AICPA Auditing Standards Board (ASB) December 2008 Exposure
         Draft of Proposed Statement on Auditing Standards (SAS) entitled Compliance
         Audits

         This letter provides the U.S. Government Accountability Office's (GAO)
         comments on the ASB's proposed SAS on compliance audits. We commend the
         ASB for taking on this project to clarify the requirements for compliance
         auditing. Overall, we support the proposed statement and believe that the
         revised SAS adds much-needed clarity in this area of practice.

         While we agree with the overall approach of the exposure draft, we believe the
         SAS could be improved and have recommendations in the following areas:

         * definition of material noncompliance,
         * intended use reports,
         * applicability,
         * questioned costs, and
         * dating of the auditor's report.


         Comments on specific topics:

         Definition of material noncompliance

         GAO has suggestions for improving this discussion in two aspects: (1) clarifying
         the definition of material noncompliance and (2) clarifying auditor
         responsibility when law, regulation or government audit requirements specify a
         different definition of material noncompliance than the definition included in
         this standard.

         The proposed standard defines material noncompliance in paragraph 11 as: A
         failure to follow requirements or a violation of prohibitions included in the

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