AICPA ARM TAANA Tax 3840x960
Tax & AccountingMarch 08, 2023

AICPA issues SAS 149 and SQMS 3

By: CCH ARM Editorial

The AICPA’s Auditing Standards Board (ASB) has released Statement on Auditing Standards (SAS) No. 149, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors), and Statement on Quality Management Standards (SQMS) No. 3, Amendments to QM Sections 10, A Firm’s System of Quality Management, and 20, Engagement Quality Reviews. 

SAS 149 and group audits

The ASB developed SAS 149 to provide “a risk-based approach to planning and performing a group audit.” SAS 149 supersedes SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, section 600, Special Considerations ⎯ Audits of Group Financial Statements (Including the Work of Component Auditors). It also includes conforming amendments to other standards. 

SAS 149 applies to an audit of group financial statements (a group audit) and to all group audits. It also “addresses special considerations that apply to a group audit, including in circumstances in which component auditors are involved or when the group auditor makes reference to the audit of a referred-to auditor.” 

As noted in the At-a-Glance document issued with SAS 149 and SQMS 3, New Statement on Auditing Standards for Group Audits, the “most significant change introduced by SAS No. 149 is that it provides a risk-based approach to planning and performing a group audit.” While former AU-C section 600 required the identification of “significant components at which to perform audit work,” SAS 149 “directs the group auditor to use professional judgment in determining the components at which to perform procedures, based on assessed risks. The ASB also intends SAS 149 to “better [align] the standard with other recently issued SASs and [clarify] the interaction between the SAS and other AU-C sections.

SAS 149 also provides a definition of the new term, “referred to auditor,” which includes: “an auditor who performs an audit of the financial statements of a component to which the group engagement partner determines to make reference in the auditor’s report on the group financial statements.” The referred to auditor is not a component auditor or a part of the engagement team for a group audit. In contrast, a component auditor is a part of the engagement team.

Effective dates

SAS 149 is effective for audits of group financial statements for periods ending on or after December 15, 2026.


The ASB also issued SQMS 3 concurrently with SAS 149. SQMS 3 amends QM Sections 10 and 20 to conform terminology to the language in SAS 149 “and provide guidance on differentiating between a resource and an information source.” 

Effective dates

The amendment to QM section 10 is effective concurrently with a firm’s implementation of SQMS Nos. 1 and 2 on December 15, 2025. The amendment to QM section 20 is effective for (a) audits or reviews of financial statements for periods beginning on or after December 15, 2025, and (b) other engagements in the firm’s accounting and auditing practice beginning on or after December 15, 2025.

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