Many state regulators require that independent auditors provide an
opinion on financial information that is submitted to a regulator, often
by means of an auditor’s report on forms prescribed by the regulator.
While auditors want to comply with these regulations, auditors are also
required to comply with state accountancy laws that require auditors to
follow generally accepted auditing standards (GAAS). If a state
regulator’s prescribed report does not include the specific elements and
wording of GAAS, an auditor is placed in the awkward position of
signing a report that is not in compliance with state accountancy law.
If these elements and wording are not contained in the prescribed form,
the auditor is required by GAAS to reword the prescribed form of the
report or attach an appropriately worded separate report.
Statement on Auditing Standards No. 122, section 800, Special
Considerations—Audits of Financial Statements Prepared in Accordance
With Special Purpose Frameworks, issued in October 2011, revised the
wording of the auditor’s report, particularly with regard to the
description of management’s responsibilities and the description of an
audit. As a result, many regulator-prescribed forms may no longer be in
accordance with GAAS. Action Needed If you are required to submit a
prescribed form for an audit of a client, please review the form to
determine if it is in accordance with the requirements of GAAS. If it is
not, you will need to do one or all of the following:
- Reword the prescribed form of the report or attach an appropriately worded separate report
- Contact the regulator to determine if the regulator will accept a reworded form or separate report
- Contact your state society to work with you and the regulator to resolve the issue
The AICPA has created the following additional resources that can be downloaded for use:
For additional information, please contact Ahava Goldman (firstname.lastname@example.org/212-596-6056).