VAC Statement 450

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Statement 450, also known as Announcement 1985-122, was issued by the former American Institute of Certified Public Accountants (AICPA) to establish auditing standards for detecting and preventing errors and irregularities in financial statements. It emphasizes the importance of auditors obtaining an understanding of the client's internal control system and performing tests to assess the system's effectiveness. The statement provides guidance on planning and performing audit procedures to address fraud risks and addresses the auditor's responsibility for communicating identified internal control deficiencies and recommendations for improving controls. This statement was replaced by AICPA Statement on Auditing Standards (SAS) 120 in 1995. However, its concepts continue to form the basis of many other AICPA and international standards related to auditor reporting and responsibilities.