Changes May Be Needed to Regulator-Prescribed Auditor's Reports

The Issue

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 (