From: Accounting Firm
Date: [ 4/13/2011 ]
Re: SAS 112- Statement of Accounting Standards
In the past years there have been some changes to the auditing standards that will have an effect on the auditing procedures performed on your financial statements. The new standard of changes is described in SAS 112. The new standard SAS 112 is effective now. This memo will describe some of the requirements of the new standard and how it will impact your business.
The term below are defined in SAS 112 and explains how they affect the auditing standards:
* A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
* A deficiency in design exists when a control necessary to meet the control objective is missing, or the control is not properly designed so that even if it operates as designed, the control objective is not always met.
* A deficiency in operation exists when a properly designed control does not operate as designed or the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.
* A significant deficiency is a control deficiency or a 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 significant deficiencies that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. ( Rebecca Otto, 2007)...