Sas No 115

MEMORANDUM

TO: CPA’s of Turner, Brad, Shall and Associates

FROM: Team B

DATE: November 8, 2010

SUBJECT: New SAS112

As you all may know, there are recent changes in the way in which auditing must take place. The purpose of the alert is to help employees better understand why the change was made, and the results of the change. SAS No. 115 will be in effect for audits of financial statements for periods ending on or after December. SAS No. 115 will have the following changes: “the definitions of the terms “material weakness and significant deficiency”, a material weakness is a combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be presented or detected and corrected on a timely basis. Significant deficiency is a combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance” (AICPA, 2008).

The change is being made because the (PCAOB) issued Auditing Standard No. 5 and audit of internal control that is place within the financial statements which has led to new definitions of the various deficiencies within the internal group. To eliminate the all the differences between the related Audits new definitions were in order to control how the audits are now being done. The new SAS has implicated revisions to the deficiencies of material weaknesses they are identification fraud, reinstatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud, identification by the auditor, and ineffective oversight of the entity’s financial reporting and internal control by those charged with governance. And lastly SAS No. 115 no longer will include a list of deficiencies. All new deficiencies are to be followed and just has when SAS No. 112 was first addressed there may be a ripple effect to...