SALY stands for Same as Last Year, an abbreviation used in public accounting. Auditors commonly use it in their work papers.
SALY is used when the audit team plans to perform the same procedures as the prior year and the approach has not changed.
The auditor’s job often seems routine and clerical. However, it involves risk assessment, testing of control, and substantive testing procedures, which apply to all account balances under audit purview.
Prior-year audit working papers serve as a good knowledge hub for the audit team. This statement is very true for inexperienced staff or anyone new to the audit of a particular entity. These working papers operate as a starting point to obtain an understanding of the entity under audit and various testing procedures performed in the prior year.
The best part is that the approach to performing audit testing doesn’t vary significantly year over year. In other words, the audit risk will not differ each year unless there are some unusual transactions or changes within the entity.
For instance, Cash substantive testing is performed by obtaining confirmations from bankers, who are independent third parties. The Audit evidence obtained through such independent confirmations is more relevant and reliable.
The primary point to drive home is that the audit team uses the word SALY to inform their team to perform the audit procedures the same as Last year. So, the auditor uses SALY in their working papers.
Is SALY applicable in all the scenarios?
That’s not applicable to all engagements. It’s advisable to add an element of surprise to audits to reduce risk and uncover fraud or errors.
If the testing approach has remained the same historically, does this leave a good chance of predicting the entity’s testing pattern?
So, the audit team shall drop some unpredictability in testing. Further, the auditor can vary the extent of the testing.
A couple of different ways of varying the testing are below
- Following different patterns of sampling
- Testing the no-risk areas
- Changing the testing strategy from substantive analytical procedures to test of details.
SALY vs Relying on PY Testing
These two concepts are different.
But they might seem similar.
Relying on PY testing means the audit team is comfortable with the balances that have passed testing in the prior year.
For example, we will understand fixed asset testing. The client support comprises the opening balance, additions, disposals, other activities or adjustments, and ending balance.
Every testing shall have meaningful documentation. We will refer to the prior year’s testing for the opening balance; the current year’s activity is tested through a test of details, and the closing balance will be recalculated.
Conclusion
SALY means the same as last year. Audit procedures and testing methodology don’t change from the previous year. It doesn’t give a right to necessarily mean religiously following it.