The AICPA Auditing Standards Board (ASB) is proposing changes to the definition of materiality in its standards for auditors and attestation engagements to eliminate inconsistencies with the definition used by other U.S. regulatory bodies.
Currently, the ASB’s description of the concept of materiality is consistent with the definition used by the International Accounting Standards Board and the International Auditing and Assurance Standards Board.
The ASB’s proposed amendments are intended to align the materiality concepts in the AICPA Professional Standards with the definition of materiality used by the U.S. judicial system, the PCAOB, the SEC, and FASB.
Exposure drafts were issued Wednesday for a proposed Statement on Auditing Standards and a proposed Statement on Standards for Attestation Engagements, both titled Amendments to the Description of the Concept of Materiality.
“These amendments will impact auditor’s reports when effective, as the new auditor’s report includes a description of when misstatements are considered material,” Robert Dohrer, CPA, CGMA, the AICPA’s chief auditor, said in a news release. “While these amendments would make the description of materiality consistent across the U.S., the amendments are not expected to significantly affect practice in the U.S., as the inconsistency with international standards is not significant.”
Despite the minimal impact on practice, the ASB believes it is in the public interest to eliminate inconsistencies between the definition used in the AICPA Professional Standards and the definition used by other U.S. bodies.
Comments are due Aug. 5 and can be emailed to Sherry Hazel at Sherry.Hazel@aicpa-cima.com.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.