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A88635 1 (2009-12-15)

handle is hein.gao/gaobadvvz0001 and id is 1 raw text is: i ~G A 0 A countabiity I ntegity * Reliability United States Government Accountability Office Washington, DC 20548 December 15, 2009 Ms. Sherry Hazel Audit and Attest Standards American Institute of Certified Public Accountants (AICPA) 1211 Avenue of the Americas New York, New York 10036-8775 Subject: AICPA Auditing Standards Board (ASB) September 2009 Exposure Draft of proposed Statement on Auditing Standards (SAS) Audits of Group Financial Statements (Including the Work of Component Auditors). This letter provides the U.S. Government Accountability Office's (GAO) comments on the ASB's proposed statement on auditing standards. GAO supports the proposed SAS and believes that it will help improve the quality of group audits. We believe that the option for a group auditor to refer to component auditors in the group auditor's report is necessary to help preserve transparency, maximize audit efficiency for the group auditor, and potentially reduce situations in which the group auditor must qualify or disclaim an audit opinion, as noted in our comments below Our responses to the questions in the Board's Issues for Consideration and Specific Comments are provided in this letter. Editorial changes and other comments are included in the attachment to this letter. Issues for Consideration The Board asks respondents specifically to consider the following questions: 1. Should auditors be permitted to make reference to the audit of a component auditor in the auditor's report on the group financial statements? We strongly support the option to allow the auditor to make reference to the audit of a component auditor in the auditor's report on group financial statements. When done in accordance with the requirements of this SAS, the option of making reference to other auditors (divided responsibility) can improve audit efficiency for the group auditor without sacrificing effectiveness. It also preserves transparency by explaining in the group auditor's report the portions of the audit performed by the component auditor. Although this represents a difference from international standards, we believe this difference is necessary. In some situations, the group auditor's making reference to the audit of the component auditor is the only practical and/or feasible option for completing the audit. For example, a component of a government entity may be required by law or regulation to have its financial statements audited by auditors other than the group auditor, or management of the group may not have the authority

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