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ExpandAS No. 1: References in Auditors’ Reports to the Standards of the Public Company Accounting Oversight Board
ExpandAS No. 3: Audit Documentation
ExpandAS No. 4: Reporting on Whether a Previously Reported Material Weakness Continues to Exist
ExpandAS No. 5: An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements
ExpandAS No. 6: Evaluating Consistency of Financial Statements
ExpandAS No. 7: Engagement Quality Review
ExpandAS No. 8: Audit Risk
ExpandAS No. 9: Audit Planning
ExpandAS No. 10: Supervision of the Audit Engagement
ExpandAS No. 11: Consideration of Materiality in Planning and Performing an Audit
ExpandAS No. 12: Identifying and Assessing Risks of Material Misstatement
ExpandAS No. 13: The Auditor's Responses to the Risks of Material Misstatement
ExpandAS No. 14: Evaluating Audit Results
ExpandAS No. 15: Audit Evidence
ExpandAS No. 16: Communications with Audit Committees
ExpandAS No. 17: Auditing Supplemental Information Accompanying Audited Financial Statements
ExpandAU Section 100 - Statements on Auditing Standards -- Introduction
ExpandAU Section 200 - The General Standards
ExpandAU Section 300 - The Standards of Field Work
CollapseAU Section 400 - The First, Second, and Third Standards of Reporting
AU Section 410 - Adherence to Generally Accepted Accounting Principles
AU Section 9410 - Adherence to Generally Accepted Accounting Principles: Auditing Interpretations of Section 410
AU Section 411 - The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
AU Section 435 - Segment Information
ExpandAU Section 500 - The Fourth Standard of Reporting
ExpandAU Section 600 - Other Types of Reports
ExpandAU Section 700 - Special Topics
ExpandAU Section 800 - Compliance Auditing
ExpandAU Section 900 - Special Reports of the Committee on Auditing Procedures

AU Section 411

The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles fn *

Supersedes SAS No. 5)
Source: SAS No. 69; SAS No. 91; SAS No. 93.
See section 9411 for interpretations of this section.
Effective for audits of financial statements for periods ending after March 15, 1992, unless otherwise indicated.

.01

[The following paragraph is effective November 15, 2008. See PCAOB Release No. 2008-001 (January 29, 2008). For the paragraph effective before November 15, 2008, click here.]

An independent auditor's report contains an opinion as to whether the financial statements present fairly, in all material respects, an entity’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. An identification of the country of origin of those generally accepted accounting principles also is required (see section 508.08h).

The purpose of this section is to explain the meaning of "present fairly" as used in the phrase "present fairly . . . in conformity with generally accepted accounting principles." In applying this section, the auditor should look to the requirements of the Securities and Exchange Commission for the company under audit with respect to the accounting principles applicable to that company.

[.02]

[Paragraph deleted, effective November 15, 2008. See PCAOB Release No. 2008-001 (January 29, 2008). Click here to view the paragraph.]

.03

The independent auditor's judgment concerning the "fairness" of the overall presentation of financial statements should be applied within the framework of generally accepted accounting principles. Without that framework, the auditor would have no uniform standard for judging the presentation of financial position, results of operations, and cash flows in financial statements.

.04

[The following paragraph is effective for audits of fiscal years beginning on or after December 15, 2010. See PCAOB Release No. 2010-004. For audits of fiscal years beginning before December 15, 2010, click here.]

The auditor's opinion that financial statements present fairly an entity's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles should be based on his or her judgment as to whether (a) the accounting principles selected and applied have general acceptance; (b) the accounting principles are appropriate in the circumstances; (c) the financial statements, including the related notes, are informative of matters that may affect their use, understanding, and interpretation (see paragraph 31 of Auditing Standard No. 14, Evaluating Audit Results); (d) the information presented in the financial statements is classified and summarized in a reasonable manner, that is, neither too detailed nor too condensed (see paragraph 31 of Auditing Standard No. 14, Evaluating Audit Results); and (e) the financial statements reflect the underlying transactions and events in a manner that presents the financial position, results of operations, and cash flows stated within a range of acceptable limits, that is, limits that are reasonable and practicable to attain in financial statements. fn 1

[.05]

[Paragraph deleted, effective November 15, 2008. See PCAOB Release No. 2008-001 (January 29, 2008). Click here to view the paragraph.]

.06

Generally accepted accounting principles recognize the importance of reporting transactions and events in accordance with their substance. The auditor should consider whether the substance of transactions or events differs materially from their form.

[.07]

[Paragraph deleted, effective November 15, 2008. See PCAOB Release No. 2008-001 (January 29, 2008). Click here to view the paragraph.]

.08

The auditor should be aware that the accounting requirements adopted by regulatory agencies for reports filed with them may differ from generally accepted accounting principles in certain respects. Section 544, Lack of Conformity With Generally Accepted Accounting Principles, paragraph .04 and section 623, Special Reports provide guidance if the auditor is reporting on financial statements prepared in conformity with a comprehensive basis of accounting other than generally accepted accounting principles.

[.09-.18]

[Paragraphs .09-.18 deleted, effective November 15, 2008. See PCAOB Release 2008-001 (January 29, 2008). Click here to view the paragraphs.]
Footnotes (AU Section 411 — The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles):

fn * Title amended, effective for reports issued or reissued on or after June 30, 2001, by Statement on Auditing Standards No. 93.

[The following footnote is effective for audits of fiscal years beginning on or after December 15, 2010. See PCAOB Release No. 2010-004. For audits of fiscal years beginning before December 15, 2010, click here.]

fn 1 The concept of materiality is inherent in the auditor's judgments. That concept involves qualitative as well as quantitative judgments (see sections 150.04, Auditing Standard No. 11, Consideration of Materiality in Planning and Performing an Audit, and 508.36). [Footnotes 2-9 deleted]

fn † [Footnote deleted]

fn ‡ [Footnote deleted]

fn || [Footnote deleted]

Copyright © 2001, American Institute of Certified Public Accountants, Inc.