CONTINUING EDUCATION FOR TAX & FINANCIAL PROFESSIONALS

Guest Post: A Quick Look at the Sections of the AICPA Auditing Standards Board Auditor’s Report

Rod Redding Headshot

Dr. Rod Redding received his PhD from Penn State University after working with Price Waterhouse and IBM. Presently, he presents seminars and webcasts and prepares self-study courses for Western CPE. 

To read more about Rod or see his coursework,  check here .

In May 2019, the Auditing Standards Board (ASB) issued SAS 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements. Over 2019 and 2020, the ASB issued SAS 135 – SAS 141 which all relate to the Auditor’s Report and are designed to go with SAS 134 as a suite of standards. The standards are designed to enhance the relevance and transparency of the auditor’s report and provide financial statement users with more meaningful information about the audit.

The original effective date for all of the standards was to be for financial statements issued on or after December 15, 2020, that is, calendar year end 2020 financial statements. However, due to the coronavirus, the ASB issued SAS 141 which changes the effective date to financial statements issued on or after December 15, 2020, that is, calendar year end 2021 financial statements. No early adoption was permitted for SAS 134-140. SAS 141 now allows early adoption of the new auditor report. The following list shows the many new sections to the Auditor’s Report.

                                                                                                        Independent Auditor’s Report
Report on the Audit of the Financial Statements
[Appropriate Addressee]
Opinion
• Moved to be first section
Basis for Opinion
• New section must follow opinion section
Key Audit Matters
• New section
Emphasis of Matter
• No longer includes going concern
Other Matter
• New section
Substantial Doubt About the Entity’s Ability to Continue as a Going Concern
• New section
Other information
• New section
Responsibilities of Management and Those Charged With Governance for the Consolidated Financial Statements
• Paragraph about need to analyze going concern
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
• Significant change
Report on Other Legal and Regulatory Requirements
• Similar
[Signature of the auditor’s firm]

Just my opinion, but the new Auditor’s Report seems well developed and does a much better job of explaining to the public about financial reporting and the role of the auditor.

If you would like to see an overview of SAS 134-141, I have prepared a one hour continuing education webcast to introduce you to the contents of the sections. 

Rod

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