Materiality Changes
Author: Pat Patterson
| CPE Credit: |
2 hours for CPAs |
The Auditing Standards Board (ASB) of the AICPA in June of 2019, issued a Proposed Statement on Auditing Standards, Amendments to the Description of the Concept of Materiality and a Proposed Statement on Standards for Attestation Engagements, “Amendments to the Description of the Concept of Materiality”.
These proposals have been issued in December 2019 as SAS 138 and SSAE 20 and amend the following SASs:
- Statement on Auditing Standards [SAS] No. 122, Statements on Auditing Standards: Clarification and Recodification,
- SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing
- SAS No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA [AICPA, Professional Standards, AU-C sec. 703])
In addition to SAS 134 and 136, the following SASs were also issued:
- SAS No. 135, Omnibus Statement on Auditing Standards—2019, May 2019.
- SAS 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports;
- SAS 139, March, 2020, Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes from SAS No. 134;
- SAS 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes from SAS Nos. 134 and 137, April 2020
- Finally, “Pre SAS 134” and SAS 141 were issued which had a major impact on the standards issued as SASs 134-140. This included SSAE 20.
Delaying the effective dates of Statements on Auditing Standards (SASs) No. 134–140 provides relief to audit firms amid the challenges created by the coronavirus pandemic.
Publication Date: March 2022
Designed For
Attendees should include those professionals in public practice, in business, in government, and in education who deal with financial statements.
Topics Covered
- What happened?
- Materiality definitions
- Okay, what has changed?
- The changes for auditors
- The amendments in AU-C
- The changes to attestation
- The changes to SSARS
- Accountant's review report
- Illustration of accountant's review report
Learning Objectives
- Identify the new standards on Materiality from ASB
- Recognize and apply an overview of SAS 138, Amendments to the Description of the Concept of Materiality
- Recognize and apply an overview of Statement on Standards for Attestation Engagements No. 20
- Identify and apply SSARS 25, Materiality in a Review of Financial Statements and Adverse Conclusions
- Identify the organization that noted that a matter is "material" if there is a substantial likelihood that a reasonable person would consider it important
- Identify the AT-C Section that was updated based on the materiality changes and provides the guidance with respect to review engagements
- Identify the basis of accounting that an entity uses to comply with the requirements or financial reporting provisions of a regulatory agency to whose jurisdiction the entity is subject
- Identify the AR-C Section that addresses the requirements for preparation of financial statements
- Identify the term used, in the context of misstatements, to describe the effects on the financial statements of misstatements that are not confined to specific elements, accounts, or items of the financial statements
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Auditing (2 hours)
Program Prerequisites
General knowledge of Generally Accepted Auditing Standards, GAAS.
Advance Preparation
None
