Auditor Reviews of Changing Prices Disclosures*
K. Fred Skousen W. Steve Albrecht
Brigham Young University
Research Purpose and Methodology
This research project was sponsored jointly by the Financial Accounting Standards Board and the American Institute of Certified Public Accountants. The objectives of the research and the steps followed in conducting the project are described in this introductory section of the report.
In September 1979, the FASB issued Statement of Finanical Accounting Standard No. 33, Financial Reporting and Changing Prices.1 This statement is an experimental standard on accounting for the effects of changing prices. It requires selected public companies to report changing prices disclosures as supplemental information to their financial statements. Although this supplemental
information is unaudited, auditing standards2 require auditors to consider this information and, in certain circumstances, to report on it.
Because of the experimental nature of SFAS 33, the FASB has encouraged research to assess costs and benefits of changing prices disclosure requirements.
This project is one of fifteen research studies being monitored by the FASB in assessing the SFAS 33 experiment. It represents the only FASB-sponsored project that is focused specifically at audit issues and that provides for auditor input.
The American Institute of CPAs, through its Auditing Standards Division, also has encouraged research directed toward improving standards and procedures for auditors who must deal with changing prices disclosures.
In assessing the SFAS 33 experiment, it is important to recognize the views of all interested groups: users, preparers, and auditors. The results of this study—the data and insight from an auditor's perspective—should be considered in light of other related research concerning the usefulness of changing prices disclosures.
* This paper was prepared initially for the AICPA and the FASB. © American Institute of Certified
Public Accountants, 1984, and reproduced herein by permission of the American Institute of
Certified Public Accountants.