Auditing and Attestation Standards Issued in 2019: Information and Resources

This is an exciting time in the auditing space. Standards are changing to keep up with today’s business environment. To set you up for success, we gathered all the AICPA’s valuable resources and information on three new auditing standards in one place. Check back often to find the latest resources.

Amendments to the Description of the Concept of Materiality (SAS No. 138 and SSAE No. 20)

SAS No. 138 and SSAE No. 20 amend various AU-C and AT-C sections, respectively, in AICPA Professional Standards, to align the materiality concepts discussed in AICPA Professional Standards with the description of materiality used by the U.S. judicial system, the auditing standards of the PCAOB, the SEC, and the FASB. The ASB believes it is in the public interest to eliminate inconsistencies between the AICPA Professional Standards and the description of materiality used by the U.S. judicial system and other U.S. standard setters and regulators. The ASB also believes that, because the revised definition is aligned with the FASB, the revised description is substantially consistent with current U.S. firm practices with respect to determining and applying materiality in an audit or attest engagement and accordingly U.S. practice is neither expected nor intended to change.

Effective date:

Effective for periods ending, or for practitioners’ examination or review reports dated, on or after December 15, 2020, respectively.

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Agreed-Upon Procedures Engagements (SSAE No. 19)

SSAE No. 19 provides flexibility to a practitioner’s ability to perform an agreed-upon procedures engagement by:

  • removing the requirement that the practitioner request a written assertion from the responsible party
  • allowing procedures to be developed over the course of the engagement
  • allowing the practitioner to assist in developing the procedures
  • no longer requiring intended users to take responsibility for the sufficiency of the procedures and instead requiring the engaging party to acknowledge the appropriateness of the procedures prior to the issuance of the practitioner’s report
  • allowing the practitioner to issue a general-use report.

The standard supersedes SSAE No. 18, Attestation Standards: Clarification and Recodification, AT-C section 215 of the same title in AICPA Professional Standards.

SSAE 19 explicitly permits practitioners to develop, or assist in developing, the procedures for AUP engagement. The AICPA Professional Ethics Division discussed perceived independence issues raised by the addition of this explicit permission and does not believe that this perceived independence issue raises any actual threats to independence. Staff notes that since SSAE 19 requires the engaging party to agree to the procedures and acknowledge that the procedures are appropriate for the intended purpose of the engagement1, that this agreement and acknowledgement mitigates any perceived self-review and management participation threats, as the practitioner would not be the only one assessing the appropriateness of the procedures. 

1 Prior to SSAE 19, specified parties were required to agree upon the procedures performed, or to be performed, and take responsibility for the sufficiency of the procedures for their purposes.

Effective date:

Effective for agreed-upon procedures reports dated on or after July 15, 2021. Early implementation is permitted.

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The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports (SAS No. 137)

SAS No. 137 provides transparency related to the auditor’s responsibility for other information included in an annual report when the auditor has obtained all the other information at the date of the auditor’s report on the financial statements. The standard supersedes SAS No. 118, Other Information In Documents Containing Audited Financial Statements, as amended and codified in AU-C Section 720.

Effective date:

Effective for audits of financial statements for periods ending on or after Dec. 15, 2020. Early implementation is not permitted.

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Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (SAS No. 136)

The new employee benefit plan (EBP) auditing standard 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 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
  • considerations relating to the Form 5500

The SAS 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). Under the new standard, reports on audits of employee benefit plans will provide users with enhanced transparency about the nature of the audit of a plan as well as the responsibilities of both the plan and the plan’s auditors.

Effective date:

Effective for audits of ERISA plan financial statements for periods ending on or after Dec. 15, 2020, SAS No. 136 applies only to audits of employee benefit plans that are subject to ERISA.  Early implementation is not permitted.

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Omnibus Statement on Auditing Standards—2019 (SAS No. 135)

SAS No. 135 is intended to more closely align Auditing Standards Board (ASB) guidance with the Public Company Accounting Oversight Board's (PCAOB) standards primarily by amending AU-C section 260, Communications With Those Charged With Governance, AU-C section 550, Related Parties, and AU-C section 240, Consideration of Fraud in a Financial Statement Audit, in AICPA Professional Standards. By eliminating unnecessary differences between the ASB guidance and PCAOB standards, auditors who perform audits under both sets of auditing standards will experience more consistency between the guidance and standards thereby enhancing audit quality.

Effective date:

Effective for audits of financial statements for periods ending on or after December 15, 2020. Early implementation is not permitted.

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Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements (SAS No. 134)

SAS No. 134 significantly changes the form and content of the auditor’s report issued after auditing a set of financial statements. The SAS also addresses the auditor’s responsibility to form an opinion on the financial statements. 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.

SAS No. 134 is a suite of auditor reporting standards that 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:

  • Section 700, Forming an Opinion and Reporting on Financial Statements
  • Section 705, Modifications to the Opinion in the Independent Auditor’s Report
  • Section 706, Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report

Effective date:

Effective for audits of financial statements for periods ending on or after December 15, 2020. Early implementation is not permitted.

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