AS 3101: The PCAOB's New Auditor Reporting Requirements

DOIhttp://doi.org/10.1002/jcaf.22351
Date01 July 2018
Published date01 July 2018
AS 3101: The PCAOBs New
Auditor Reporting Requirements
Paul M. Clikeman
AS 3101: THE
PCAOBS NEW
AUDITOR REPORTING
REQUIREMENTS
In June 2017, the
Public Company
Accounting Stan-
dards Board
(PCAOB) adopted a
new audit reporting
standard, AS 3101,
The Auditors Report
on an Audit of Finan-
cial Statements When
the Auditor Expresses
an Unqualied Opin-
ion (PCAOB, 2017).
The primary goals of
the new standard are
to make the auditors
report easier to read,
clarify the auditors
responsibilities while
performing an audit,
and provide addi-
tional information to
report users. The
most signicant
change is a requirement that
auditors discuss critical audit
matters(CAMs) within their
reports. These are the issues
that arose during the audit that
involved especially challeng-
ing, subjective or complex
auditor judgment.PCAOB
Chairman James Doty declared
the new reporting standard the
rst signicant
change in the stan-
dard form auditors
report in more than
70 years(Cohn,
2017a).
Despite opposi-
tion from the
U.S. Chamber of
Commerce and more
than two dozen large
corporations (Cohn,
2017a), the Securities
and Exchange Com-
mission unanimously
approved the new
reporting require-
ments on October
23, 2017. To give
auditors and clients
adequate time to pre-
pare, CAMs need not
be disclosed until
audits of scal years
ending on or after
June 30, 2019 for
large accelerated
lers or December
15, 2020 for all other
companies to which the
requirement applies. All the
other reporting changes, not
relating to CAMs, are effective
AS 3101, The Auditors Report on an Audit of
Financial Statements When the Auditor Expresses
an Unqualied Opinion (PCAOB, 2017) represents
the most signicant change to American audit
reports in more than 70 years. The new standard
form unqualied report, which is required for audits
of scal years ending on or after December
15, 2017, moves the auditors opinion to the rst
paragraph, uses section titles to identify important
information, claries that the nancial statement
notes are included within the scope of the audit,
and requires auditors to disclose the year they
began serving consecutively as the companys
auditors. For large accelerated lers in 2019 and
smaller PCAOB clients in 2020, auditors must begin
identifying and discussing critical audit matters.
These are the issues that arose during the audit
that involved especially challenging, subjective or
complex auditor judgment.When AS 3101s
reporting requirements are completely implemented,
American audit reports will change from three or
four paragraphs of standardized boilerplate
language to a longer, much more exible report
describing the specic judgments and procedures
unique to each client. © 2018 Wiley Periodicals, Inc.
© 2018 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI 10.1002/jcaf.22351 7

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