On May 8, 2019, the AICPA issued two new auditing standards that will change the wording and format of the auditor’s report. The first new standard (SAS No. 134) allows auditors to communicate key audit matters in the auditor’s report when an auditor is engaged to do so. Key audit matters include those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements. Key audit matters are selected from matters communicated with those charged with governance. They could include high risk areas of the audit, significant auditor judgments, or the effect on the audit of significant events or transactions that occurred during the period. The new standard also puts the auditor’s opinion at the top of the report, as opposed to its current spot at the bottom of the report.
The second new standard (SAS No. 135) tries to align certain audit guidance with that of the PCAOB. The areas affected include communications with those charged with governance, related parties, and consideration of fraud.
Both standards are effective starting with calendar year 2020 audits.
For more information, please contact Audit Director, Nathan Hartman.