March 14 2018
The American Institute of CPAs’ Auditing Standards Board has issued an auditing interpretation to help accountants comply with standards from both the AICPA and the Public Company Accounting Oversight Board.
Auditing interpretation No. 4, “Reporting on Audits Conducted in Accordance With Auditing Standards Generally Accepted in the U.S. and the Standards of the PCAOB,” for AU-C section 700, Forming an Opinion and Reporting on Financial Statements, offers guidance on how an auditor can comply with the AICPA assurance standard in the context of PCAOB Auditing Standard (AS) 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, as adopted by the PCAOB and approved last October by the SEC.
The PCAOB standard expands the format of audit reports to go beyond the traditional pass/fail nature of them to include a discussion of critical audit matters relating to accounts or disclosures that are material to the financial statements and involved especially challenging, subjective or complex auditor judgments. The new PCAOB audit report standard also requires a disclosure of auditor tenure, indicating which year a firm began serving as the company’s auditor.
The AICPA noted that while auditing interpretation No. 4 has been determined to be consistent with Generally Accepted Auditing Standards, it shouldn’t be construed as an interpretation of PCAOB standards.