ASB enhances communication in auditors’ reports
The AICPA Auditing Standards Board (ASB) recently issued standards that are designed to enhance the communicative value of the auditor’s report and align generally accepted auditing standards (GAAS) with the standards issued by the International Auditing and Assurance Standards Board (IAASB) and the PCAOB.
The ASB issued:
“The auditor reporting suite of standards will benefit users of audited financial statements throughout the U.S. by placing the auditor’s opinion at the front of the report for added visibility and providing necessary transparency into the basis for the auditor’s opinion and the responsibilities of both entity management and auditors,” Bob Dohrer, CPA, CGMA, the AICPA’s chief auditor, said in a news release.
The PCAOB standard requires reporting of “critical audit matters” that are discovered during the audit, while the IAASB standard instructs practitioners on the reporting of “key audit matters.”
SAS No. 134 does not require reporting of key audit matters in an engagement but provides reporting requirements for communication of key audit matters in the auditor’s report when the auditor is engaged to do so.
SAS No. 134 addresses the auditor’s responsibility to form an opinion on the financial statements and provides new guidance for the form and content of the auditor’s report. The standard also contains requirements for when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary and when additional communications are necessary in the auditor’s report.
This suite of auditor reporting standards includes a new AU–C Section 701, Communicating Key Audit Matters in the Independent Auditor’s Report, and replaces the following AU–C sections in AICPA Professional Standards:
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