Proposed Revised SAS

The ASB has issued a proposed revised SAS Proposed Revised Statement on Auditing Standards Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country. It would supersede SAS No. 51, Reporting on Financial Statements Prepared for Use in Other Countries (AICPA, Professional Standards, vol. 1, AU sec. 534).

If this exposure draft looks familiar to you it is because the ASB issued an exposure draft, SAS Reporting on Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country on September 30, 2009. After revising the previous exposure draft for certain matters noted in comment letters, the ASB decided to reexpose the SAS (referred to in the exposure draft as the proposed revised SAS) to seek additional comments.

The proposed revised SAS says that when financial statements are prepared in accordance with a financial reporting framework generally accepted in another country, and such financial statements are intended for use in the other country, the proposed revised SAS would require the inclusion of an emphasis of matter paragraph that will highlight the foreign financial reporting framework in any report also intended for use in the United States, and permits an unqualified opinion.

This proposed revised SAS addresses circumstances in which an auditor practicing in the United States is engaged to report on financial statements that have been prepared in accordance with a financial reporting framework generally accepted in another country not adopted by a body designated by the Council of the AICPA (Council) to establish generally accepted accounting principles (GAAP) when such audited financial statements are intended for use outside the United States. This proposed revised SAS is not intended to preclude the use of such audited financial statements in the United States.

Note that this proposed revised SAS:

• Does not apply to financial statements prepared in accordance with financial reporting frameworks established by the bodies designated by the Council.
• Is applicable to engagements to report on financial statements prepared in accordance with a jurisdictional variation of IFRSs when the entity’s financial statements do not contain an explicit and unreserved statement in an appropriate note to the financial statements that its financial statements are in compliance with IFRSs as issued by the IASB.
• Does not apply to engagements to report on financial statements of a U.S. subsidiary of a foreign registrant parent company that are presented in the parent company’s filing with the SEC when the subsidiary’s financial statements have been prepared in accordance with a financial reporting framework used by the parent company and audited in accordance with auditing standards generally accepted in the United States of America (GAAS).

The proposed revised SAS was issued in November 2010. The comment period ended January 31, 2011 and the SAS would be effective for audits of financial statements for periods ending on or after December 15, 2012.

Statements on Auditing Standards exposure drafts are available for download on the AICPA website www.aicpa.org.

New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx

Become a subscriber.
Subscribers have access to more detailed updates, Become a subscriber by going to www.cpafirmsupport.com and clicking on “Join Us.”