AICPA Board Proposes Three Auditing Standards

December 4, 2017

The American Institute of Certified Public Accountants’ (“AICPA”) Auditing Standards Board recently issued the following exposure drafts of Proposed Statements on Auditing Standards (“SASs”):

  • Proposed Statements on Auditing Standards, Auditor Reporting and Proposed Amendments―Addressing Disclosures in the Audit of Financial Statements:  The Exposure Draft proposes amendments converge the AICPA auditor reporting standards with standards of the International Standard on Auditing by the International Auditing and Assurance Standards Board (“IAASB”). The proposed changes address:
    • Forming an Opinion and Reporting on Financial Statements;
    • Communicating Key Audit Matters in the Independent Auditor’s Report;
    • Modifications to the Opinion in the Independent Auditor’s Report; and
    • Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report.

Additionally, the proposed auditor reporting SASs would replace certain portions of SAS No. 122, Statements on Auditing Standards: Clarification and Recodification. The exposure draft also offers changes regarding disclosures in financial statement audits with the proposed amendments to auditor reporting.

  • Proposed SAS, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports: The Exposure Draft would replace AU-C section 720, Other Information in Documents Containing Audited Financial Statements [AICPA, Professional Standards]. The proposed SAS would converge the other information standard with that of the IAASB, ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.

Per the proposal, “other information” means financial or nonfinancial information (aside from financial statements and the auditor’s report) included in a company’s annual report. If the new standard is adopted, the auditor must review the other information, and determine and identify any material discrepancies between the additional information and the financial statements or material misstatements. The proposal also outlines what actions the auditor must take to address such disparities and inaccuracies.

  • Proposed SAS, Omnibus Statement on Auditing Standards – 2018: The Exposure Draft proposes changes to SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, and SAS No. 130, An Audit of Internal Control over Financial Reporting That is Integrated with an Audit of Financial Statements (AU-C sec. 940).

Comments on the exposure drafts will be accepted until May 15, 2018.