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A88356 1 (2008-08-12)

handle is hein.gao/gaobadvuo0001 and id is 1 raw text is: i A& A--G A 0 == Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 August 12, 2008 Ms. Sharon Macey Audit and Attest Standards American Institute of Certified Public Accountants 1211 Avenue of the Americas New York, NY 10036-8775 Subject: AICPA Auditing Standards Board (ASB) June 2008, Exposure Draft: Proposed Statement on Standards for Attestation Engagements, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements (Supersedes AT Section 501, Reporting on an Entity's Internal Control Over Financial Reporting). This letter provides the U.S. Government Accountability Office's (GAO) comments on the ASB's proposed revisions to AT Section 501. We have major concerns about the provisions of the proposed standard that would prohibit auditors from issuing an adverse opinion any time they encounter restrictions on the scope of an engagement, regardless of the nature or extent of the restrictions. Our concerns on this issue along with other comments and suggestions are summarized below. Scope Limitations Proposed AT 501 would require auditors to withdraw from an engagement or disclaim an opinion any time there are restrictions on the scope of an engagement, even when the auditors have identified one or more material weaknesses. We believe that the standard should allow flexibility for auditors to issue an adverse opinion when they have sufficient evidence to conclude that an entity's system of internal control is not effective. The existence of a material weakness provides such evidence. To incorporate flexibility into the proposed standard, we recommend revising paragraph 118 as follows: Paragraph 118: The auditor can express an unqualified or adverse opinion on the entity's internal control only if the auditor has obtained sufficient appropriate evidence to support such an opinion. , ble t3 f th rfc Ift in e rc -nees. ff If the auditor is unable to obtain sufficient aDoroDriate evidence to suport such an opinion due to restrictions on the scope of the engagement, the auditor should withdraw from the engagement or disclaim an opinion. If the auditor has

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