Proposal Aligns Definition of Materiality Used by U.S. Judicial System, PCAOB, SEC and FASB
New York, N.Y. (June 5, 2019) - The American Institute of CPA’s (AICPA) Auditing Standards Board (ASB) 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 amend various AU-C and AT-C sections in AICPA Professional Standards.
“These amendments will impact auditor’s reports when effective as the new auditor’s report includes a description of when misstatements are considered material,” said Robert Dohrer, CPA, CGMA, AICPA Chief Auditor. “While these amendments would make the description of materiality consistent across the U.S., the amendments are not expected to significantly affect practice in the U.S. as the inconsistency with international standards is not significant.”
The ASB’s current description of the concept of materiality is consistent with the International Accounting Standards Board’s and the International Auditing and Assurance Standards Board’s definitions of materiality.
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 Public Company Accounting Oversight Board, the U.S. Securities and Exchange Commission and the Financial Accounting Standards Board.
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.
Interested parties are encouraged to submit their feedback by August 5, 2019.