Audit reporting standards are changing, and an expert says CPAs must understand what the changes are, train staff and communicate with clients.
Mike Glynn, senior audit and attest standards manager at the AICPA, said the new auditing standards change, named SAS 134, is the most important standard change in a long time.
“It’s one of the standards that is not only vital to auditors but also their clients and users of audited financial statements.”
Why were the changes necessary? Glynn said SAS 134 is consistent with the International Auditing Standards Board revised auditor’s reporting standard. It’s also consistent with the PCAOB’s audit reporting model.
“The ASB harmonized the standards so that CPAs who perform engagements internationally, on public companies, and non-issuers in the United States issue reports that have a consistent look.”
Glynn said an important element of SAS 134 is increased transparency. “The new report shows exactly what the auditor has done and what the client’s responsibilities are.”
The most visible change, Glynn said, is the auditor’s opinion has been moved from the end to the beginning of the report. He said there is also a new required disclosure on independence and other significant issues that may make the new reports longer and less “boilerplate.”
“Unlike most of our standards,” Glynn said, “in this case, early implementation is not permitted. It’s effective for audits of financial statements for periods ending on or after Dec. 15, 2020.”
“At the end of the day, the change increases the value of the audit without a significant increase in audit work.”
To learn more about SAS 134 and future auditing updates from Mike Glynn, attend the Cincinnati Accounting Show Sept. 25-26. He will also provide an update on compilation and review engagements.