The AICPA has issued the Exposure Draft, Proposed Statement on Auditing Standards: Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134. The comment due date is October 28, 2019.
SAS 134
The AICPA issued Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, in May 2019. SAS 134 makes important changes to the requirements for the form and content of the auditor’s report issued as a result of an audit of financial statements. These changes were designed to be more consistent with the auditor reporting rules of the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB). In addition, SAS 134 addresses the auditor’s responsibilities to form an opinion on the financial statements.
SAS 134 moves the opinion section of the auditor’s report, requiring that it be the first section presented. This is designed to provide both added visibility and transparency. The opinion is to be followed by the basis for opinion section, and then separate sections for responsibilities of management and auditors responsibilities, respectively. In another significant change, SAS 134 also adopts a requirement for auditors to communicate key audit matters in the auditor’s report when engaged to do so.
Proposed Amendments to AU-C 800 Sections
While SAS 134 primarily amended the AU-C 700 sections of the auditing standards, the new Exposure Draft proposes changes to the AU-C 800 sections. If the provisions in the Exposure Draft are adopted as proposed, they will amend the following sections of SAS No. 122, Statements on Auditing Standards: Clarification and Recodification:
- AU-C Section 800, Special Considerations — Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks;
- AU-C Section 805, Special Considerations — Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement; and
- AU-C Section 810, Engagements to Report on Summary Financial Statements.
The amendments, if adopted as proposed, would also modify the AU-C 800 sections to incorporate changes introduced by the recently issued auditing standards, SAS 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, and SAS 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports, which supersedes SAS 118, Other Information in Documents Containing Audited Financial Statements.
The proposed changes would also further align the AU-C 800 series with the provisions in SAS 134 that converge with the IAASB standards.
Effective Date
As with SAS 134 and other recently issued auditing standards, the amendments in the proposed SAS are expected to be effective for audits of financial statements for periods ending on or after December 15, 2020, with early implementation not permitted.
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