Is the Second Standard of Fieldwork Necessary
Thomas P. Bintinger
Touche Ross & Co.
Today's generally accepted auditing standards were primarily framed in 1947 by the Committee on Auditing Procedure (Committee) of the American Institute of Accountants, the predecessor bodies of the current Auditing Standards Board and the American Institute of Certified Public Accountants. The standards were formally adopted by the profession at its annual meeting in September 1948.* These standards have remained in place since that time with numerous statements interpreting them adopted by the Auditing Standards Board or its predecessors. These familiar standards are organized into two general classes: (1) personal or general standards and (2) procedural stand-ards. The procedural standards have two categories: the conduct of the fieldwork and reporting. The objective of this paper is to focus on the procedural standards, in particular, the second standard of fieldwork:
There is to be a proper study and evaluation of the existing internal control as a basis for reliance thereon and for the determination of the resultant extent of the test to which auditing procedures are to be restricted.1
This second standard of field work pertaining to the evaluation of internal control is interposed between the first which covers planning and supervision of the work and the third which requires evidential matter to be obtained as a reasonable basis for an opinion regarding the financial statements being examined. Its mandate has been subject to considerable interpretations in formal statements which include:
Special Report by the Committee November 1948
on Auditing Procedure Internal Control—Elements of a Coordinated System and its Importance to Management and the Independent Public Accountant
Statement on Auditing Procedure 29 October 1958
Scope of the Independent Auditor's Review of Internal Control
* The fourth reporting standard was subsequently added and approved by the membership of the AIA (AICPA) in 1949.