ASB addresses compliance with GAAS, PCAOB standards

The AICPA Auditing Standards Board (ASB) issued a new interpretation Wednesday that provides guidance on how an auditor complies with AU-C Section 700A, Forming an Opinion and Reporting on Financial Statements, in the AICPA Professional Standards when the communication of critical audit matters as described in PCAOB standards is required.

The guidance is contained in Auditing Interpretation No. 5, Communicating Critical Audit Matters When Reporting on Audits Conducted in Accordance With Auditing Standards Generally Accepted in the United States of America and the Standards of the PCAOB, to Section 700A, Forming an Opinion and Reporting on Financial Statements.

The new interpretation builds on Auditing Interpretation No. 4, Reporting on Audits Conducted in Accordance With Auditing Standards Generally Accepted in the United States of America and the Standards of the PCAOB, to Section 700A, Forming an Opinion and Reporting on Financial Statements. Interpretation No. 4 provides guidance on how an auditor complies with AUC-Section 700A in the context of PCAOB Auditing Standard (AS) 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion.

Interpretation 4 includes paragraphs .14 to .21 and Interpretation 5 includes paragraphs .22 to .26 in AU-C Section 9700A.

Interpretation 5 discusses whether the auditor is required to communicate critical audit matters when performing an audit in accordance with both GAAS and AS 3101, and notes that an auditor should apply all the requirements for critical audit matters set forth in AS 3101 unless it is determined by management that the entity is not subject to critical audit matters reporting.

Interpretations 4 and 5 are consistent with GAAS, according to the ASB, but are not interpretations of PCAOB standards and have not been approved or acted upon by the PCAOB.

— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.