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Statements on Auditing No. 26 Procedure APRIL 1956 • Issued by the Committee on Auditing Procedure, American Institute of Accountants, 270 Madison Avenue. New York 16, N.Y. Copyright 1956 by American Institute of Accountants Reporting on Use of "Other Procedures" 1. In 1939 the membership of the Institute approved the exten-sion of auditing procedures to require observation of inventories and confirmation of receivables where either of these assets represents a significant proportion of the current assets or of the total assets of a concern. 2. These procedures were thus established as an integral part of generally accepted auditing procedures. Failure to apply them, where they are practicable and reasonable, in general precludes expression of an opinion on the fairness of the financial statements taken as a whole. 3. Codification of Statements on Auditing Procedure states (third and fourth paragraphs on page 21): "In all cases in which the extended procedures are not carried out with respect to inventories or receivables at the end of the period or year, and they are a material factor, the independent certified public accountant should disclose, in the general scope section of his report, whether short or long form, the omission of the procedures, regard-less of whether or not they are practicable and reasonable and even though he may have satisfied himself by other methods. "In the rare situation in which they are applicable and are not used and other procedures can be employed which will enable him to ex-press an opinion, he should, if the inventories or receivables are material in amount, disclose the omission of the procedures in the general scope paragraph without any qualification in the opinion paragraph with respect to such omission. In deciding upon the 'other procedures' to be employed he must bear in mind that he has the burden of justifying the opinion expressed." 4. It has become increasingly evident in those instances where the accountant's report has disclosed omission of the extended pro-cedures that, in the minds of a number of interested parties, including 17