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Going Concern Standard - SAS 126 - released by AICPA, Supercedes SAS 59

As reported on July 6, 2012 in The CPA Letter Daily (via SmartBrief.com), the AICPA recently released Statement on Auditing Standards No. 126, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (Redrafted), which supersedes SAS No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern. (AICPA, Professional Standards, AU sec. 341 and AU-C sec. 570).

Props to Justin Hayes, Audit Manager with Katz, Sapper & Miller, for highlighting this development in a post in the ww.SocialCPAs.com group.

The CPA Letter Daily further notes the new SAS was issued as part of the AICPA's Clarity Project. Further, the publication notes [bulleted format [and text in brackets] added for emphasis] that:
  • SAS No. 126 does not change or expand SAS No. 59, as amended, in any significant respect.
  • The ASB has moved forward with the clarity redraft of SAS No. 59, as amended, so that it is consistent with the format of the other clarified SASs that were recently issued.
  • However, the ASB decided to delay convergence with International Standard on Auditing 570, Going Concern, pending the Financial Accounting Standards Board's anticipated development of accounting guidance addressing going concern. [See our prior post re: FASB and Going Concern] 
  • SAS No. 126 is effective for audits of financial statements for periods ending on or after Dec. 15, 2012.
Read the AICPA's 1-page Summary of SAS No. 126.

Scope: Keep in mind that since the formation of the PCAOB as specified under the Sarbanes-Oxley Act of 2002, the AICPA writes standards applicable to audits of private companies, and the PCAOB writes standards applicable to registered audit firms (audit firms registered with the PCAOB) to perform audits of public companies, and PCAOB standards pertain to those public company audits.

When the PCAOB was first formed, it adopted many of the AICPA's predecessor standards as 'interim standards' of the PCAOB (thereby making those particular AICPA auditing standards applicable to not only private company audits, but also public company audits), until such time as the PCAOB adopted its own standard in that particular area(s).

Therefore, the AICPA's action described above (i.e., the issuance of SAS 126 replacing SAS 59) has no direct effect on PCAOB standards or standard-setting, as confirmed by a PCAOB spokesperson.
Posted: 7/10/2012 11:45:11 PM by Edith Orenstein | with 0 comments
Filed under: auditing standards,going concern,Justin Hayes,Katz,SAS 126,SAS 59,FASB,PCAOB,Sapper and Miller,SocialCPAs,AICPA


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Edith Orenstein