Audit and Attest
If you perform audit and attest engagements, the information and resources here will help you stay informed of changes to audit and attest standards, perform your engagements, and be aware of common pitfalls in these engagements.
The Auditing Standards Board promulgates Statements on Auditing Standards (SAS), Statements on Standards for Attestation Engagements (SSAE) and Statements on Quality Control Standards (SQCS), and, as a part of its due process, releases Exposure Drafts of proposed standards. The AICPA also issues interpretive and other publications to assist practitioners in understanding and applying the standards.
ASB Proposes SAS and SSAE to Amend the Description of Materiality
The AICPA Auditing Standards Board has issued an exposure draft of a Proposed Statement on Auditing Standards and a Proposed Statement on Standards for Attestation Engagements, both titled Amendments to the Description of the Concept of Materiality. The proposed standards would respectively amend various AU-C and AT-C sections in AICPA Professional Standards. The ASB's current description of the concept of materiality is consistent with the definition of materiality used by the International Accounting Standards Board and the International Auditing and Assurance Standards Board. The ASB is proposing amendments to align the materiality concepts discussed in AICPA Professional Standards with the definition of materiality used by the U.S. judicial system, the auditing standards of the PCAOB, the U.S. Securities and Exchange Commission, and the Financial Accounting Standards Board. U.S. practice is not expected to be significantly affected because the inconsistency with international standards is not significant. The ASB believes it is in the public interest to eliminate inconsistencies between the AICPA Professional Standards and the definition of materiality used by the U.S. judicial system and other U.S. standard setters and regulators. Comments are due August 5.
ASB Issues Statement on Auditing Standards Nos. 134 and 135
The Auditing Standards Board (ASB) issued SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements and SAS No. 135, Omnibus Statement on Auditing Standards—2019, in May 2019. Visit our hub site, Auditing Standards Issued in 2019: Information and Resources, for the latest information on these standards
Helping Management of a Service Organization Prepare for a SOC 1® Engagement
The Service Organizations Task Force of the Auditing Standards Board has developed a publication intended for management of a service organization that is undergoing, or planning on undergoing a SOC 1® engagement. These engagements are performed under AT-C 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting, The publication, entitled Information for Management of a Service Organization in a SOC 1® Engagement, contains illustrations and answers to frequently asked questions that will help management of a service organization prepare for and facilitate the SOC 1® engagement. The members of the Service Organizations Task Force are CPAs who specialize in performing SOC engagements, and the publication reflects their expertise and experience in performing these engagements.
AICPA Health Care Expert Panel Holds Podcast Discussion on FASB ASU 2018-08
FASB ASU No. 2018-08, Clarifying the scope and the accounting guidance for contributions received and contributions made, was issued in June 2018 and included rapid adoption dates to align as closely as possible to the new revenue recognition adoption requirements. The standard was issued to make it easier for NFP and other organizations, including healthcare entities, to evaluate whether gifts, grants or contracts should be accounted for as contributions—subject to FASB Accounting Standards Codification (ASC) 958, Not-for-Profit Entities—or as reciprocal (exchange) transactions accounted for under other topics such as ASC 606, Revenue from Contracts with Customers. Further, the standard provides additional considerations for determining if a contribution is conditional. The AICPA Health Care Expert Panel held a discussion on the standard, including some questions and observations that have come up specific to the healthcare industry's adoption of this clarified guidance around grants and contributions.
ASB Releases Final Balloted Draft of SAS That Addresses Auditor Reporting on ERISA Plan Financial Statements
The ASB has voted to issue SAS Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.
The SAS addresses the auditor’s responsibility to form an opinion and report on the audit of financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA), and the form and content of the auditor’s report issued as a result of an audit of ERISA plan financial statements. The ASB expects to consider whether conforming amendments to this SAS will be necessary once the Proposed SASs Auditor Reporting and Related Amendments are voted to be issued, which is expected to occur in the first half of 2019.
The SAS includes new requirements for engagement acceptance, audit risk assessment and response, communications with those charged with governance, procedures for an ERISA section 103(a)(3)(C) audit, and considerations relating to the Form 5500. It also contains a new report format for ERISA section 103(a)(3)(C) audits. For audits of ERISA plan financial statements only, this SAS would apply in place of AU-C section 700, Forming an Opinion and Reporting on Financial Statements, and paragraph .09 of AU-C section 725, Supplementary Information in Relation to the Financial Statements as a Whole (AICPA, Professional Standards). The SAS also would amend various other AU-C sections in AICPA Professional Standards.
When issued, the SAS is expected to be effective no earlier than for audits of financial statements for periods ending on or after December 15, 2020. New resources are now available including an “At a Glance” document and Frequently Asked Questions.
In an effort to keep its members informed, the AICPA has created a Standards Tracker. This tool will keep members up to date regarding the most recent guidance made available by standard setters, filtered in order to give you only what you need to know.