SAS 61, 112 and 114

Statement of Accounting Standards 112

SAS 112 goes into effect / becomes effective for periods ending on or after 12-15-06. I have mentioned in recent trainings that auditors will soon be looking more closely at your internal controls. With this new standard they are now obliged to report any deficiencies to your board and in the auditor’s report. From the document linked to below:

Requires the auditor to communicate control deficiencies that are significant deficiencies or material weaknesses in internal control.

A significant deficiency is a control, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected.

A material weakness is a significant deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Here is a PDF of that tells more about it.

Statement of Accounting Standards 114

SAS No. 114, The Auditor’s Communication With Those Charged With Governance, was recently issued by the ASB. The new SAS supersedes SAS No. 61, Communication with Audit Committees, and is effective for audits of financial statements for periods beginning on or after December 15, 2006 (generally, 2007 calendar year-end audits.)

The new SAS establishes standards for the matters required to be communicated by the auditor, the form and timing of that communication, and to whom the matters should be communicated. These new standards apply to all entities regardless of size, ownership, or organizational structure.