Understanding SAS No. 99

Abstract

Auditors have a responsibility to their clients, as well as to their profession, to detect fraud during audit engagements. The AICPA’s Auditing Standards Board has taken steps to clarify the auditing process that will most effectively and efficiently detect fraud. Originally Statement on Auditing Standards (SAS) No. 82 was issued to create regulations and provide information regarding fraud detection. However, in 2002, the AICPA felt as though a revision of that standard was needed, and thus SAS No. 99 was adopted.The basic intention of the new standard was to “establish standards and provide guidance to auditors in fulfilling their responsibility as it relates to fraud in an audit of financial statements conducted in accordance with generally accepted auditing standards” (Bukics 2003). As a result of this standard, an increased importance on recognizing financial statement fraud became mandatory (Bukics 2003). The increased emphasis on discovering fraud meant that new policies and procedures were necessary in order to achieve the goals set by the new standard.The new standard increased the requirements from SAS No. 82, thus increasing the amount of work for auditors, the amount of time spent on each audit, the amount of documentation necessary, and the overall cost of the audit. Though it increased work and cost, SAS No. 99 provided greater detail in order to enable financial statement fraud to better be detected.