The ASB did this for two reasons. Management s responsibility to determine whether a decline in fair value is other than temporary is explicitly recognized in SAS no. 81. Investments accounted for using the equity method. The guidance in SAS no. 81 is effective for audits of financial statements for periods ending on or after December 15, 1997.
Early application is permissible.
While the issuance of SAS no. 81 may cause auditors to reassess their policies on management representations related to investments, the statement should not be difficult to implement.