1. The Firm of Choice. 1 New Auditing Standards Maintaining the Integrity of the Independent Audit

2. The Firm of Choice. 2 Reason for New Standards Auditing profession continually reviews practices and makes necessary improvements Post Enron and Sarbanes-Oxley Higher expectations of auditors Need to maintain audit quality in changing business environment

3. The Firm of Choice. 3 Overview Standards re-write many of the fundamental building blocks of auditing Require more extensive and different types of procedures than performed in the past Effective for audits of financial statements beginning after December 15, 2006

4. The Firm of Choice. 4 The Basic Audit Process New process is designed to be more adaptable to individual client circumstances. Obtain thorough understanding of client, including internal control Use understanding to assess risk Use risk assessment to design and perform procedures

5. The Firm of Choice. 5 Effect on Audits More work to form an understanding of the client More extensive procedures to evaluate internal control design Involve more experienced personnel to obtain required level of understanding Shift portions of the work to a period in advance of year-end

6. The Firm of Choice. 6 Questions?