ASB Issues SAS on Reports on Application of Requirements of an Applicable Financial Reporting Framework

The Auditing Standards Board has issued Statement on Auditing Standards, Reports on Application of Requirements of an Applicable Financial Reporting Framework. This SAS supersedes SAS No. 50, Reports on the Application of Accounting Principles (AICPA, Professional Standards, vol. 1, AU sec. 625). It is effective for engagements that end on or after December 15, 2012.

This SAS covers the reporting accountant’s responsibilities when asked to issue a written report on either the application of the requirements of an applicable financial reporting framework to a specific transaction or the type of report that may be issued on a specific entity’s financial statements. It also applies to oral advice provided by the reporting accountant that the reporting accountant concludes is intended to be used by a principal to the transaction as an important factor considered in reaching a decision on the application of the requirements of an applicable financial reporting framework to a specific transaction or on the type of report that may be issued on a specific entity’s financial statements.

Because there are differing interpretations that may exist concerning whether and, if so, how existing accounting policies in an applicable financial reporting framework apply to new transactions or how new accounting policies in an applicable financial reporting framework apply to existing transactions, management and others may consult with accountants on the application of the requirements of an applicable financial reporting framework to those transactions or to increase their knowledge of specific financial reporting issues.

You should be aware that this SAS does not apply to:

• a continuing accountant with respect to the specific entity whose financial statements the continuing accountant has been engaged to report on,
• engagements either to assist in litigation involving accounting or auditing matters or to provide expert testimony in connection with such litigation,
• professional advice provided to another accountant in public practice,
• to communications such as position papers prepared by an accountant for the purpose of presenting views on an issue involving the application of the requirements of an applicable financial reporting framework, provided that these communications are not intended to provide guidance on the application of these requirements to a specific transaction.

You may download clarified auditing standards from the AICPA website at www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources.

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