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A89579 1 (2010-04-30)

handle is hein.gao/gaobadvxc0001 and id is 1 raw text is: i ~G AO0 . A~counta bity I Integrity * Reliabiity United States Government Accountability Office Washington, DC 20548 April 30, 2010 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 2009 Exposure Draft for a proposed Statement on Auditing Standards (SAS), entitled Communicating Internal Control Related Matters Identified in an Audit (Redrafted). This letter provides the U.S. Government Accountability Office's (GAO) comments on the ASB's proposed SAS on communicating internal control related matters identified in an audit. In general we support the proposed revisions to SAS 115 to converge with Internal Standard on Auditing (ISA) 265 and to implement the clarity drafting conventions. We especially support the new requirement for the auditor to include in the written communication of significant deficiencies and material weaknesses identified an explanation of the potential effects of those deficiencies. This important new requirement to inform management and those charged with governance of the potential effects will help them to determine appropriate remedial action. We do, though, have one major concern with the proposed standard. In our December 22, 2009 letter to the ASB, we expressed concern over restricted use requirements and guidance in the proposed SAS Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report because they are not consistent with requirements and guidance in Government Auditing Standards and do not always serve the public interest. Audited financial statements and related auditor reports of government entities are public documents. Government audits provide key information to stakeholders and the public and help maintain accountability for the use of public resources. Public access to these auditor reports is an important element of this process. In addition, the restricted use requirements and guidance are not in ISA 265 and we are not aware of any compelling reasons to include them in the proposed SAS. In exhibit D, the comparison of the proposed SAS with ISA 265, the restricted use requirements are identified as a difference between the standards but no rationale for this difference is given.

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