The Auditing Standards Board (ASB) of the American Institute of CPAs (AICPA) has issued three exposure drafts that call for major changes to auditors’ reports.
The board considered reporting projects by the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB) in proposing the drafts.
According to an evaluation of the proposals posted on the Pennsylvania Institute of CPAs website by Allison Henry, CPA, CGMA, vice president of professional and technical standards, the drafts propose these changes:
Moving the opinion to the first paragraph.
Adding an auditor statement of compliance with ethical responsibilities and independence.
Expanding the discussion of the auditor’s responsibilities and the key features of an audit.
Expanding the description of management’s responsibilities for preparing and fairly presenting the financial statements and requiring the identification of those responsible for the oversight of the financial reporting process if they differ from those responsible for financial statement preparation.
Adding new reporting for other information included in an annual report.
Revising the reporting on the entities ability to continue as a going concern.
Providing guidance when the communication of key audit matters is contractually required.
The proposal’s requirement to disclose key audit matters was not expanded to include private companies, Henry wrote.
Comments on the AICPA’s proposed changes are due by May 15, 2018.
The provisional effective date of the drafts won’t be earlier than for audits for periods ending on or after June 15, 2019.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.