Even More Audit Changes for June 30, 2008
School Advisor, 2007 Issue No. 2

Even though it is still more than a year away, we want to continuously remind you of the major changes in audit approach required by SAS Nos. 104 to 111. These eight new standards deal with an auditor’s risk assessment process. The new standards represent significant changes to the existing audit practice.

The new standards primarily require:

• A deeper understanding of the district and its internal control, for purposes of identifying the risks of material misstatement in the financial statements and what the district is doing to mitigate those risks
•  A more rigorous assessment of the risks of material misstatement based on that understanding, with additional emphasis on significant risks that call for special audit considerations
• A better linkage between the assessed risks and the audit procedures performed in response to those risks

At this point, the specific impact of these standards on the school district auditing process is being evaluated. Clearly the impact of failures, such as Enron and WorldCom that prompted the Sarbanes-Oxley legislation, continues to also impact school district auditing.