STANDARDS RECENTLY ISSUED

ADDITION

DELETION

CHANGE

This publication is organized into two main sections.

The first section, "Applicability of AICPA Professional Standards," provides guidance about standards applicable to entities as defined by the Sarbanes-Oxley Act of 2002, as amended, and standards applicable to nonissuers and standards applicable to issuers.¹

The next section, “U.S. Auditing Standards—AICPA (Clarified) [AU-C],” contains the clarified codified auditing standards and the related auditing interpretations.

These sections are described in more detail in the following sections.

U.S. Auditing Standards—AICPA (Clarified) [AU-C]

The AU-C sections comprise Statement on Auditing Standards (SAS) Nos. 122–135 and auditing interpretations. Superseded portions have been deleted, and all applicable amendments have been included. Refer to individual AU-C sections for specific effective dates. The AU-C sections are arranged as follows:

AU-C Cross-References to SASs

Introduction

General Principles and Responsibilities

Risk Assessment and Response to Assessed Risks

Audit Evidence

Using the Work of Others

Audit Conclusions and Reporting

Special Considerations

Special Considerations in the United States

Appendixes

Topical Index

The AU-C Cross-References to SASs is a list of SASs issued since SAS No. 122 and a list of sources of sections in the current text.

The standards are divided into sections, each with its own section number. Each paragraph within a section is decimally numbered.

Auditing interpretations are numbered in the 9000 series with the last three digits indicating the section to which the interpretation relates. Interpretations immediately follow their corresponding section. For example, an interpretation related to section 230 is numbered 9230, which directly follows section 230.

There are five appendixes relating to auditing standards as follows:

Appendix A provides the historical background for the SASs.

Appendix B highlights substantive differences between International Standards on Auditing and Generally Accepted Auditing Standards.

Appendix C is reserved.

Appendix D lists AICPA Audit and Accounting Guides and Statements of Position.

Appendix E provides a schedule of changes that lists changes that are the result of SASs issued after SAS No. 122.

Appendix F provides a list of other auditing publications published by the AICPA that have been reviewed by the AICPA Audit and Attest Standards staff.

The AU-C topical index uses the keyword method to facilitate reference to the pronouncements. The index is arranged alphabetically by topic and refers the reader to major divisions, sections, and paragraph numbers.

Who Is a Nonissuer?

Appendix A, “Council Resolution Designating Bodies to Promulgate Technical Standards,” of the AICPA Code of Professional Conduct recognizes both the Auditing Standards Board (ASB) and the PCAOB as standard setting bodies designated to promulgate auditing, attestation, and quality control standards. Paragraph .01 of the “Compliance With Standards Rule” (ET sec. 1.310.001 and 2.310.001) requires an AICPA member who performs an audit to comply with the applicable standards.

Audits of the financial statements of those entities subject to the oversight authority of the PCAOB (that is, those audit reports within the PCAOB’s jurisdiction as defined by the Sarbanes-Oxley Act of 2002, as amended), are to be conducted in accordance with standards established by the PCAOB, a private sector, nonprofit corporation created by the Sarbanes-Oxley Act of 2002. The SEC has oversight authority over the PCAOB, including the approval of its rules, standards, and budget.

Audits of the financial statements of those entities not subject to the oversight authority of the PCAOB (that is, those audit reports not within the PCAOB’s jurisdiction as defined by the Act, as amended—hereinafter referred to as nonissuers¹) are to be conducted in accordance with generally accepted auditing standards (GAAS) as issued by the ASB, a senior committee of the AICPA.

Standards Applicable to the Audits of Entities as Defined by the Act, as Amended

Rule 3100, Compliance with Auditing and Related Professional Practice Standards (AICPA, PCAOB Standards and Related Rules), issued by the PCAOB, generally requires all registered public accounting firms to adhere to the PCAOB’s standards in connection with the preparation or issuance of any audit report on the financial statements of an entity as defined by the Act, as amended. Rule 3100 requires registered public accounting firms and their associated persons to comply with all applicable standards. Accordingly, if the PCAOB's standards do not apply to an engagement or other activity of the firm, Rule 3100, by its own terms, does not apply to that engagement or activity.

Rule 3101, Certain Terms Used in Auditing and Related Professional Practice Standards (AICPA, PCAOB Standards and Related Rules), issued by the PCAOB, defines the degree of responsibility imposed on the auditor by the use of certain terms in the PCAOB’s auditing and related professional practice standards, including the interim standards adopted in Rule 3200, Auditing Standards; Rule 3300T, Interim Attestation Standards; Rule 3400T, Interim Quality Control Standards; and Rule 3500T, Interim Ethics and Independence Standards.

Standards Applicable to the Audits of Nonissuers

The ASB is the body authorized to promulgate auditing, attestation and quality control standards for nonissuers. The ASB develops and issues standards in the form of Statements on Auditing Standards (SASs) through a due process that includes deliberation in meetings open to the public, public exposure of proposed SASs, and a formal vote.

Pursuant to AU-C section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards, professional requirements under GAAS are categorized as either “unconditional requirements” or “presumptively mandatory requirements,” each of which is identified by specific terms. Unconditional requirements are stated with “must.” Presumptively mandatory requirements are stated with “should.” In the clarified auditing standards, application and explanatory guidance does not create or impose requirements; rather, it is relevant to the proper application of the requirements of an AU-C section.

As a caution to readers, pursuant to AU-C section 200, interpretive publications are recommendations on the application of GAAS in specific circumstances, including engagements for entities in specialized industries. Interpretive publications, which include auditing interpretations, auditing guidance in AICPA Audit and Accounting Guides, and auditing guidance found in Statements of Position, are issued under the authority of the ASB. Although interpretive publications are not auditing standards, AU-C section 200 requires the auditor to consider applicable interpretive publications in planning and performing the audit because interpretive publications are relevant to the proper application of GAAS in specific circumstances. If the auditor does not apply the auditing guidance included in an applicable interpretive publication, the auditor should document how the requirements of GAAS were complied with in the circumstances addressed by such auditing guidance.

Failure to follow ASB standards in the audit of a nonissuer would be considered a violation of the “General Standards Rule” (ET sec. 1.300.001 and 2.300.001) and the “Compliance With Standards Rule” (ET sec. 2.310.001) of the AICPA Code of Professional Conduct, as applicable.

The ASB continues to issue SASs and interpretive publications that relate to audits of nonissuers, and auditors should be alert to those issuances.

Audits of a Nonissuer’s Financial Statements Audited in Accordance With Both GAAS and PCAOB Auditing Standards

AU-C section 700A, Forming an Opinion and Reporting on Financial Statements, addresses the auditor’s report for audits conducted in accordance with both GAAS and another set of auditing standards. Paragraph .42 of AU-C section 700A explains that the auditor may indicate that the audit was conducted in accordance with GAAS and also conducted in accordance with another set of auditing standards (for example, the standards of the PCAOB). Paragraph .42 also states that the auditor should not refer to having conducted an audit in accordance with another set of auditing standards in addition to GAAS, unless the audit was conducted in accordance with both sets of standards in their entirety. Paragraph .43 of AU-C section 700A goes on to state that when the auditor’s report refers to both GAAS and another set of auditing standards, the auditor’s report should identify the other set of auditing standards, as well as their origin.

Integrated Audit of a Nonissuer’s Financial Statements

AU-C section 940, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements, establishes requirements and provides guidance that applies only when an auditor is engaged to perform an audit of internal control over financial reporting that is integrated with an audit of financial statements (integrated audit).

AICPA Standards and the Audits of Entities as Defined by the Act, as Amended

If a registered public accounting firm performs an audit of an entity as defined by the Act, as amended, in accordance with PCAOB standards, the auditor does not need to follow standards promulgated by the ASB. However, AICPA members are required to comply with the AICPA Code in addition to the ethics and independence rules and standards required by the SEC and PCAOB.