SAS 114 Letter Consulting Services

The AICPA’s auditing standards board has issued Statement on Auditing Standards (SAS) 114, The Auditor’s Communication With Those Charged With Governance, which supersedes SAS 61, Communication With Audit Committees. SAS 114 defines the terms “those charged with governance” as the person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity.

SAS 114 outlines the auditor’s responsibilities of communication under generally accepted auditing standards, the planned scope and timing of the audit, independence, and the significant findings from the audit, including:

• Qualitative aspects of the entity’s significant accounting practices
• Significant difficulties, if any, encountered during the audit
• Uncorrected misstatements, if any
• Disagreements with management, if any
• Other matters arising from the audit that are significant and relevant to those charged with governance

The auditor should communicate significant matters relevant to the audit with those charged with governance on a timely basis and in writing. When matters are communicated orally, the auditor should document them.

SAS 114 is effective for audits of financial statements for periods beginning on or after December 15, 2006.

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