The Effects of SAS No. 55 on Audits of Small Businesses.

This survey was designed to learn how SAS No. 55 has affected audits of small businesses. Because substantive-based audit strategies are often employed on small business audits, it is not clear whether the control structure understanding and documentation procedures required by SAS No. 55 have produced benefits commensurate with their costs. Most of the respondents to the survey expressed satisfaction with the standard as it applies to their small business audits. This is despite the fact that most claimed to seldom rely on controls and that they have experienced increases in audit costs as a result of SAS No. 55. The primary changes reported were in the audit program development and internal control study phases. More respondents indicated their benefits have exceeded costs than claimed the opposite. The primary benefits cited were increased audit effectiveness and a better understanding of how internal controls fit into the audit process. Documenting the system was the only frequently cited cost and many stated that it was only significant for initial audit engagements.