Top 5 mistakes in implementing new auditing standards
If you’re an auditor, chances are you’re grappling with the slew of new auditing standards that have been implemented recently.
- There’s Statement of Auditing Standard 103, a documentation rule that requires auditors to document their work so that it can be recreated by third parties.
- There’s SAS 112, which requires auditors to report material deficiencies and weaknesses in internal controls to their clients in writing.
- And there’s Statements of Auditing Standards 104-111, the new risk assessment standards that ask auditors to consider the risk that a plan’s financial statements may be misstated and to design their audit steps so that the risk of misstatement is reduced.
Lots of new complexity to deal with. And not surprisingly, some auditors are making lots of mistakes as they try to comply with the standards.
Jennifer Louis has been documenting those mistakes and teaching CPAs how they can avoid them …and conduct better audits in the process. Louis is president of Emergent Solutions Group, which offers training specifically for financial and accounting professionals. She is also an instructor with the Business Learning Institute, where she teaches a number of programs, including one titled, “Integrating the New Risk Assessment Standards into the Audit Process.”
In this MACPA podcast, Louis identifies the top five mistakes she believes auditors are making with regard to the news standards. Those mistakes are:
- Relying too much on standard audit tools and not really understanding how to assess specific risks.
- Failure to hone in on the biggest risks for specific clients. Some auditors don't identify anything as a risk, while others identify everything as a risk.
- Thinking of the audit at the transactional level, rather than seeing the big picture of what's going on after a transaction occurs.
- Relying too much on clients' internal controls when those controls haven't really been tested.
- Not adjusting audit procedures to align with the level of audit risk.
Listen to the podcast in its entirety to hear Louis' take on these mistakes -- as well as her advice for how to avoid these mistakes in future audits.
- Subscribe to our free weekly podcasts here, or open your copy of iTunes and search for "CPA Spotlight."
Learn more at the Expo
Louis will lead a pair of programs -- a Sarbanes-Oxley update and a look at internal controls -- at the first-ever Maryland Business and Accounting Expo, slated for June 17-18 at the Baltimore Convention Center. Get details about the Expo and register here.