This is an exciting time in the auditing and attestation 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 these new auditing standards in one place. Check back often to find the latest resources.
- Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (SAS No. 145)
- Amendments to AU-C Sections 501, 540, and 620 Related to the Use of Specialists and the Use of Pricing Information Obtained From External Information Sources (SAS No. 144)
- Review Engagements (SSAE No. 22)
- Direct Examination Engagements (SSAE No. 21)
- Auditing Accounting Estimates and Related Disclosures (SAS No. 143)
- Audit Evidence (SAS No. 142)
- Pre-SAS No. 134 Codification of GAAS Available Through 2021
- Amendment to the Effective Dates of SAS Nos. 134–140 (SAS No. 141)
- Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137 (SAS No. 140)
- Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134 (SAS No. 139)
- Amendments to the Description of the Concept of Materiality (SAS No. 138 and SSAE No. 20)
- The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports (SAS No. 137
- Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (SAS No. 136)
- Omnibus Statement on Auditing Standards—2019 (SAS No. 135)
- Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements (SAS No. 134)
Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (SAS No. 145)
SAS No. 145 enhances the requirements and guidance on identifying and assessing the risks of material misstatement, in particular the areas of understanding the entity’s system of internal control and assessing control risk. The SAS also includes extensive guidance regarding the use of information technology (IT) and the consideration of IT general controls. Finally, the SAS revises the definition of significant risks, includes new guidance on maintaining professional skepticism, and includes a new “stand-back” requirement intended to drive an evaluation of the completeness of the identification of significant classes of transactions, account balances, and disclosures by the auditor. Click here to register for an upcoming webcast about this standard.
Effective Date:
SAS No. 145 becomes effective for audits of financial statements for periods ending on or after December 15, 2023.
Helpful resources:
Amendments to AU-C Sections 501, 540, and 620 Related to the Use of Specialists and the Use of Pricing Information Obtained From External Information Sources (SAS No. 144)
SAS No. 144 addresses certain comments that were received on the exposure draft that resulted in the issuance of SAS No. 143, Auditing Accounting Estimates and Related Disclosures. Among other things, the SAS provides guidance in AU-C section 501, Audit Evidence — Specific Considerations for Selected Items, on applying SAS No. 143 when management has used the work of a specialist in developing accounting estimates, as well as other amendments to enhance guidance about evaluating the work of the management’s specialist; adds a new appendix to AU-C section 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, that provides guidance on the use of pricing information from pricing services when evaluating management’s estimates related to the fair value of financial instruments; and enhances the guidance in AU-C section 620, Using the Work of an Auditor’s Specialist, related to using the work of an auditor’s specialist.
Effective Date:
SAS No. 144 becomes effective for audits of financial statements for periods ending on or after December 15, 2023.
Helpful resources:
Review Engagements (SSAE No. 22)
SSAE No. 22 supersedes SSAE No. 18, Attestation Standards: Clarification and Recodification, as amended, section 210 of the same title. Among other things, SSAE No. 22 describes the types of procedures a practitioner may perform in a review engagement, requires that the practitioner’s report include an informative summary of the work performed as a basis for the practitioner’s conclusion, and permits the expression of an adverse conclusion. The standard also includes revisions to conform AT-C section 210, Review Engagements, with revised AT-C section 205, Assertion-Based Examination Engagements, as a result of the recent issuance of SSAE No. 21, Direct Examination Engagements. The ASB believes the enhancements to its attestation review standard provides helpful information to users of the review reports by explaining the nature of the work done in the review. The ASB also believes it is in the public interest to enable the practitioner to express an adverse conclusion when appropriate to alert the user that the subject matter information is materially misstated, and the effects of the misstatements are pervasive.
Effective Date:
SSAE No. 22 becomes effective for practitioners’ review reports dated on or after June 15, 2022. Early implementation is permitted only if the practitioner also early implements the amendments to AT-C section 105, Concepts Common to All Attestation Engagements, included in SSAE No. 21, Direct Examination Engagements.
Helpful resources:
Direct Examination Engagements (SSAE No. 21)
SSAE No. 21 adds a new section in AICPA Professional Standards designated as AT-C section 206, Direct Examination Engagements. AT-C section 206 enables practitioners to measure or evaluate underlying subject matter against criteria and express an examination opinion that conveys the results of that measurement or evaluation (a direct examination). In this new direct examination engagement, the responsible party is not required to measure or evaluate the underlying subject matter against criteria and the practitioner is not required to obtain a written assertion from the responsible party; however, the responsible party continues to be required to acknowledge responsibility for the underlying subject matter. The new SSAE amends AT-C section 105, Concepts Common to All Attestation Engagements, principally for new terminology, and supersedes and renames AT-C section 205 to Assertion-Based Examination Engagements. SSAE No. 21 supersedes AT-C section 205 to differentiate it from AT-C section 206, although both types of examination engagements are reasonable assurance engagements. Revised AT-C section 205 continues to enable practitioners to perform traditional assertion-based examination engagements.
The AICPA Professional Ethics Division believes any potential independence questions raised when the practitioner is engaged to perform the measurement or evaluation of the subject matter as part of the practitioner’s evidence gathering process are addressed by the requirements of AT-C 206 for (1) the measurement or evaluation to be performed at the same time as the direct examination engagement; (2) the responsible party to be a party other than the practitioner; and (3) the responsible party to take responsibility for the underlying subject matter.
Effective Date:
SSAE No. 21 becomes effective for practitioner’s reports dated on or after June 15, 2022. Early implementation is permitted.
Helpful resources:
Auditing Accounting Estimates and Related Disclosures (SAS No. 143)
SAS No. 143 is intended to enable auditors to appropriately address the increasingly complex scenarios that arise today from new accounting standards that include estimates and related disclosures, and to enhance the auditor’s focus on factors driving estimation uncertainty and potential management bias. In our current environment, management’s estimates related to asset impairments are particularly important and this standard will aid auditors in assessing management’s estimates during a period of economic uncertainty and volatility.
Effective Date:
SAS No. 143 becomes effective for audits of financial statements for periods ending on or after December 15, 2023.
Helpful resources:
Audit Evidence (SAS No. 142)
The primary focus of SAS No. 142, including its objective, is on considering the attributes and factors of information that contribute to an assessment of whether sufficient appropriate audit evidence has been obtained. This standard is based on the premise that the auditor should evaluate information to be used as audit evidence notwithstanding the source from which it is obtained, or the procedures used to obtain the information. New attributes of information for the auditor to consider include whether the information is corroborative or contradictory to management assertions, the authenticity of the evidence and its susceptibility to bias.
Effective Date:
SAS No. 142 becomes effective for audits of financial statements for periods ending on or after December 15, 2022.
Helpful resources:
Pre-SAS No. 134 Codification of GAAS Available Through 2021
To assist auditors and firms that do not implement SAS Nos. 134–140 prior to December 15, 2021, a “Pre-SAS No. 134” edition of the auditing standards (the AU-C sections) in AICPA Professional Standards is now available. This edition contains SAS Nos. 122–133, as amended, and remains effective through 2021 and should be followed when SAS Nos. 134–140 have not been implemented. Each AU-C section in this edition is designated with a “B” suffix (for example, “AU-C section 200B”) to denote content that does not reflect the codification of SAS Nos. 134–140 or the amendments to other SASs made by SAS Nos. 134–140. Upon implementation of SAS Nos. 134–140, auditors and firms should no longer utilize this edition.
Amendment to the Effective Dates of SAS Nos. 134–140 (SAS No. 141)
SAS No. 141 delays by one year the effective dates of SAS Nos. 134–140 (which, among other things, substantially changes the auditor’s report) from December 15, 2020, to December 15, 2021, and also permits early implementation of this suite of standards. As a result of the COVID-19 pandemic, the Auditing Standard Board (ASB) believes it is in the public interest and a welcome relief to members to issue this standard.
Effective Date:
SAS No. 141 becomes effective upon issuance.
Helpful resources:
Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137 (SAS No. 140)
SAS No. 140 completes the ASB’s yearlong effort to conform GAAS with the reporting provisions of SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, and other recently issued SASs. In addition, certain other AU-C sections in AICPA Professional Standards have been amended to reflect practice issues that have arisen since the most recent revisions to these AU-C sections, and AU-C section 935, Compliance Audits, has also been amended to be consistent with current governmental requirements.
Effective date:
SAS No. 140 becomes effective for periods ending on or after December 15, 2020. Early implementation is not permitted. (Note: SAS No. 141 defers the effective date of SAS No. 140 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134 (SAS No. 139)
SAS No. 139 aligns AU-C sections 800, Special Considerations—Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks, 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement, and 810, Engagements to Report on Summary Financial Statements, with the reporting provisions of SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, and other recently issued SASs. The issuance of SAS No. 139 is another step in finalizing the AICPA’s Auditor Reporting suite of standards. These revised auditor’s reports involving special purpose accounting frameworks and other unique reporting scenarios provide additional transparency into the basis for the auditor’s opinion and the responsibilities of both entity management and auditors.
Effective date:
SAS No. 139 becomes effective for periods ending on or after December 15, 2020. Early implementation is not permitted. (Note: SAS No. 141 defers the effective date of SAS No. 139 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful 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. (Note: SAS No. 141 defers the effective date of SAS No. 138 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
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. (Note: SAS No. 141 defers the effective date of SAS No. 137 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
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. (Note: SAS No. 141 defers the effective date of SAS No. 136 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
- ASB addresses ERISA plan auditor reporting, other information in annual reports, Journal of Accountancy, July 10, 2019
- Employee benefit plan auditing rules to change, Journal of Accountancy, February 1, 2019
- EBP at a Glance
- Illustrative auditor’s reports for initial year of implementation of SAS No. 136
- EBP FAQs
- EBPAQC Audit Advisory on SAS No. 136 (Available exclusively to EBPAQC members)
- EBPAQC tool for discussing SAS No. 136 with plan clients (Available exclusively to EBPAQC members)
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. (Note: SAS No. 141 defers the effective date of SAS No. 135 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
- ASB enhances communication in auditors’ reports, Journal of Accountancy, May 8, 2019
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. (Note: SAS No. 141 defers the effective date of SAS No. 134 to December 15, 2021, and the ASB recommends that SAS Nos. 134–140 be implemented concurrently.)
Helpful resources:
- ASB enhances communication in auditors’ reports, Journal of Accountancy, May 8, 2019
- New Auditor Reporting Standard webcast
- Podcast: A new opportunity for auditors to communicate, Journal of Accountancy, May 10, 2019
- At a Glance summary document
