United States

Standard issued for audits conducted under both PCAOB standards and GAAS

FINANCIAL REPORTING INSIGHTS  | 

Auditors of entities whose audits are within the jurisdiction of the Public Company Accounting Oversight Board (PCAOB), which include audits of issuers and non-issuer broker-dealers registered with the SEC, are required to be registered with, and subject to inspection by, the PCAOB. In these situations, the AICPA Code of Professional Conduct requires members to conduct the audit of the financial statements in accordance with the standards of the PCAOB and does not also require an audit to be conducted in accordance with auditing standards generally accepted in the United States of America (GAAS).
Other situations exist in which an entity whose audits are not within the jurisdiction of the PCAOB desires (or is required by an agency, a regulator or contractual agreement) to obtain an audit conducted under PCAOB auditing standards. In these situations, the AICPA Code of Professional Conduct requires members to also conduct the audit in accordance with GAAS. Examples of situations in which an auditor may be engaged to conduct an audit in accordance with the auditing standards of the PCAOB for an entity whose audit is not within the jurisdiction of the PCAOB include:

  • Audits for clearing agencies and futures commission merchants registered with the U.S. Commodities Futures Trading Commission (CFTC), as well as other entities registered with the CFTC
  • Audits of financial statements included in certain securities offering documents pursuant to Regulation A of the Securities Act of 1933
  • Any circumstances in which a nonissuer company desires, or is required by contractual agreement, to obtain an audit of its financial statements in accordance with the standards of the PCAOB. An example of a situation where a nonissuer would request to be audited in accordance with PCAOB auditing standards is when the nonissuer anticipates conducting an initial public offering in the near future.

The Auditing Standards Board recently issued Statement on Auditing Standards (SAS) No. 131, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements, which requires that, in the situations described in the preceding paragraph, the auditor should use the report layout and wording specified by the auditing standards of the PCAOB, amended to indicate that the audit also was conducted in accordance with GAAS.
The SAS is effective for audits of financial statements for periods ending on or after June 15, 2016.