Statements on Auditing Procedure
Issued by the
Extensions of Auditing Procedure
Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st Street, New York, N. Y.
Copyright 1941 by American Institute of Accountants
To THE MEMBERS OF THE
AMERICAN INSTITUTE OF ACCOUNTANTS:
Under date of May 9, 1939, the council of the American Institute of Accountants adopted a report submitted by the special com-mittee on auditing procedure entitled "Extensions of Auditing Pro-cedure," and at the same time it was anticipated that the committee would make a supplemental report at the September meeting. The report of May 9th emphasized that it was the ultimate responsibility of the independent certified public accountant to adopt such pro-cedures as in his professional judgment he deemed appropriate, but recommended that certain additional procedures regarding inven-tories and accounts receivable should be considered as generally ac-cepted practice. It further recommended that, where these additional procedures regarding inventories and accounts receivable had not been undertaken, that fact should be disclosed in the auditors' report or opinion.
The action of the council received widespread support of state or-ganizations of certified public accountants, and the recommendations evoked the hearty approval of investors, credit grantors, the press, and the public.
During the four months which elapsed between the issuance of the report and the September meeting, the committee had considerable discussion and correspondence with informed people, both within and without the profession, and held a number of meetings. While the recommended additional procedures had the united support of independent accountants, it was evident that there was some miscon-ception as to the meaning intended to be conveyed by the term "physi-cal tests" as applied to inventory quantities, that considerable mis-understanding had arisen as to the responsibility which the auditor might be assuming, and that the recommended reference in the auditors' report of opinion to the omission of such procedures had been misconstrued.