Staff guidance issued by the PCAOB describes key considerations related to the new auditor's reporting model.
The PCAOB's new auditor's reporting model is described in Auditing Standard No. 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, and related amendments. The standard took effect for audits of fiscal years ending on or after Dec. 15, 2017, except for changes related to critical audit matters.
Changes were made to clarify the auditor's role and responsibilities, provide additional information about the auditor, and make the auditor's report easier to read.
Auditor communication of critical audit matters is permissible on a voluntary basis but will not be required until audits of fiscal years ending on or after June 30, 2019, for audits of large accelerated filers, or Dec. 15, 2020, for audits of all other companies that are required to comply with the standard.
The new standard's requirements include:
- That the first section of the report consist of the opinion on the financial statements, immediately followed by the section describing the basis for opinion.
- That the auditor's report be addressed to the shareholders and the board of directors, or equivalents for companies not organized as corporations.
- A statement in the auditor's report containing the year the auditor began serving consecutively as the company's auditor.
Meanwhile, the Center for Audit Quality, which is affiliated with the AICPA, has developed a new tool, discussing the implications for audit committees of the PCAOB's new auditor's report. The tool, The Auditor's Report: Considerations for Audit Committees, is available on the PCAOB's website at thecaq.org.