In May 2020, the AICPA’s Auditing Standards Board (ASB) voted for a one-year delay in the effective date for a series of inter-related SAS Nos. 134-140. The new effective date is for fiscal years ending on or after December 15, 2021. However, the previous prohibition on early implementation was removed. Therefore, the suite of standards can now be implemented at any time prior to the revised effective date.
The objective of the delay was to provide more time for firms to effectively implement audit requirements in light of the negative impact of the coronavirus pandemic on available resources. However, there are substantial benefits for choosing to implement the new standards earlier than the revised effective date, as they enhance the value of the auditor’s report and better align requirements with other audit standard-setting bodies.
The delay impacts the following, among other changes that were intended to be implemented:
- Reformatting the audit report to converge with other standard-setting bodies, including reports on special purpose framework engagements, compliance audits and other special situations
- Adding required procedures for related-party transactions and significant unusual transactions
- Providing specific guidance for forming an opinion on financial statements of employee benefit plans subject to ERISA
- Clarifying responsibilities for other information included in annual reports
- Altering the definition of materiality for consistency with other US standard-setting bodies
- Updating guidance for reporting on supplementary information, interim reporting, and other requirements that merited change along with the new audit report format
While there is no prohibition against implementing the new individual standards piecemeal, the ASB has stated that the intent was to concurrently implement these standards as a complete suite. It is important that firms ensure that the proper version of the standards is being applied as intended during the cross-over period.
The content contained in this article is for information purposes only and not tax advice. You should consult your own tax advisor for tax advice that applies to your particular situation.
Jennifer Louis has more than 25 years of experience in designing high-quality training programs in a variety of technical and soft skills topics necessary for professional and organizational success. In 2003, she founded Emergent Solutions Group, LLC, where she focuses on designing and delivering practical and engaging accounting and auditing training. Jennifer started her career in audit for Deloitte & Touche. She graduated summa cum laude from Marymount University with a BBA in accounting.
