New auditing standards issued by AICPA impact reports issued by auditors
ECLUB NEWS |
The American Institute of Certified Public Accountants (AICPA) has issued changes to the auditing standards for private companies. One of the changes that clients will notice most is the new format of the audit report.
Below is an example of the report that companies can hopefully expect to receive from their auditors under the new standards.
COMPARATIVE FINANCIAL STATEMENTS -
UNQUALIFIED BOTH YEARS
Illustrative report on financial statements assuming:
- Audit of a complete set of general purpose financial statements
- The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP)
- Comparative financial statements are presented and the firm has audited both years
- The auditor has concluded that the financial statements are presented fairly, in all material respects, in accordance with US GAAP for both periods presented
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Report on the Financial Statements
We have audited the accompanying financial statements of Model Club which comprise the statements of financial position as of December 31, 20X2 and 20X1, and the related statements of activities and cash flows for the years then ended and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Model Club as of December 31, 20X2 and 20X1, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
[DATE OF THE AUDITOR'S REPORT]