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Tax & AccountingMarch 28, 2022

AICPA’s ASB Issues Group Audits Proposal

By: CCH ARM Editorial

The AICPA’s Auditing Standards Board has issued the Exposure Draft, Proposed Statement on Auditing Standards, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors). The comment deadline is June 21, 2022. 

The ASB has issued this Exposure Draft as part of its efforts to converge its auditing and other standards with those of the International Auditing and Assurance Standards Board (IAASB). The ASB has drafted this Exposure Draft to converge with the IAASB’s International Standard on Auditing (ISA) 600, Special Considerations⎯Audits of Group Financial Statements (Including the Work of Component Auditors) (ISA 600 [Revised]). The ASB decided to converge their group audit standard with that of the IAASB because the ASB “believes that the issues that led the IAASB to revise its standards are of equally critical importance in the United States. [and] . . . for firms that perform engagements in accordance with standards of the IAASB and the ASB, complying with fundamentally different group audit standards is not feasible.”

The Exposure Draft

According to the ASB, the proposed SAS, if adopted as final, would “strengthen the auditor’s approach to planning and performing a group audit and to improve the quality of group audits" by: 

  • Requiring that all applicable AU-C sections be applied in a group audit engagement; 
  • Including subsections of each section of the proposed SAS that describe the requirements that apply when component auditors are involved; and 
  • Providing greater clarity on the scope and applicability of the proposed SAS, including through enhancements to the definition of group financial statements.

Among other provisions, the proposed standard would supersede SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, as amended, section 600, Special Considerations ⎯ Audits of Group Financial Statements (Including the Work of Component Auditors). It would also amend other SASs to conform to the group audits standard.

Proposed Effective Date

The Exposure Draft provides that the SAS, if adopted as proposed, “would be effective for audits of group financial statements for periods ending on or after December 15, 2026.”

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