United States

Standard issued for audits conducted under both PCAOB standards and GAAS

FINANCIAL REPORTING INSIGHTS  | 

Futures commission merchants that are not also SEC-registered broker-dealers and certain other entities will have audits conducted under both auditing standards of the Public Company Accounting Oversight Board (PCAOB) and auditing standards generally accepted in the United States of America (GAAS). 

Auditors of entities whose audits are within the jurisdiction of the 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 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 entities whose audits are not within the jurisdiction of the PCAOB include clearing agencies and futures commission merchants registered with the Commodities Futures Trading Commission (CFTC), as well as certain other entities registered with the CFTC that are not also SEC-registered broker-dealers.

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 situation described in the preceding paragraph, when the auditor plans to refer to the standards of the PCAOB in addition to GAAS in the auditor’s report, 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.