Proposed omnibus Statement on Auditing Standards
FINANCIAL REPORTING INSIGHTS |
In developing and updating auditing standards, the Auditing Standards Board (ASB) considers, among other matters, the standards of other standard setters, such as the Public Company Accounting Oversight Board (PCAOB). Accordingly, the ASB has reviewed recent PCAOB auditing standards to consider whether the standards include material that, if included in the requirements or application material of U.S. generally accepted auditing standards, would enhance audit quality for audits of nonissuer financial statements in an effective and efficient manner. As a result, the ASB recently issued a proposed Statement on Auditing Standards (SAS), Omnibus Statement on Auditing Standards – 2018, which includes the following proposed amendments, among several others:
- Additional requirements to communicate to those charged with governance the auditor’s views relating to the entity’s significant unusual transactions, and the potential effects of uncorrected misstatements on future-period financial statements
- Enhanced requirements to identify previously unidentified or undisclosed related parties or significant related party transactions, and enhanced procedures to test the accuracy and completeness of the related parties and relationships and transactions with related parties identified by the entity
- Required communication to the component auditor about the nature of the entity’s relationships and transactions with those related parties in the list of related parties prepared by group management and any other related parties of which the group engagement team is aware
- Requirements for basic procedures for obtaining information for evaluating significant unusual transactions
If finalized, the proposed SAS will be effective for audits of financial statements for periods ending on or after June 15, 2019. The proposed SAS is available for comment until May 15, 2018.