Proposed Disclosures in Auditor Reporting

Author: Pat Patterson

The AICPA’s Auditing Standards Board (ASB) has proposed amendments to address disclosures in an audit of financial statements. Join expert Pat Patterson, CPA, as he focuses on the amendments that are intended to focus the auditor’s attention on disclosures earlier in the process of auditing financial statements. The ASB is proposing amendments to specific AU-C sections rather than a separate SAS on disclosures to encourage a view that the whole of disclosures is more than just a sum of the parts of disclosed. An integrated approach to auditing disclosures throughout the financial statement audit is being presented. This on-demand course will explore the details of the proposals.

Publication Date: September 2018

Designed For
All CPAs who are either auditors in public practice, professionals in businesses being audited, professionals in government, professionals in education, or any professional with a need to understand what the proposals for audit disclosures are about.

Topics Covered

• Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards- Definition of financial statements in GAAS includes disclosures
• Terms of Engagement- Emphasize that it is beneficial for auditors to agree with management, early in the audit process, regarding management's responsibilities relating to the preparation of disclosures, as well as providing access to information necessary for audit purposes
• The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements- Emphasize the need for auditors to consider disclosures when assessing the risk of material misstatement arising from fraud
• Communication with Those Charged with Governance- Encourage auditors to discuss matters relating to disclosures and the financial statements early in the audit process
• Planning an Audit of Financial Statements- The importance of giving appropriate attention to, and planning adequate time for addressing, disclosures in the same way as classes of transactions, events, and account balances, and early consideration of matters such as significant new or revised disclosures
• Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement- Revise the assertions for presentation and disclosure to promote their more consistent and effective use by integrating the relevant assertions relating to disclosures within the other categories of assertions rather than keeping them as separate assertions
• Materiality in Planning and Performing an Audit- Clarify that the nature of potential misstatements in disclosures is also relevant to the design of audit procedures to address the risks of material misstatement
• The Auditor's Responses to Assessed Risks- Assist auditors with more effectively responding to the risks of material misstatement in disclosures
• Evaluation of Misstatements Identified during the Audit- Clarify that misstatements in disclosures are accumulated, and that the effect of uncorrected misstatements, both individually and in aggregate, is considered in light of the financial statements as a whole
• Forming an Opinion and Reporting on Financial Statements- Guidance for the audit procedures when evaluating the presentation of the financial statements, including whether fair presentation has been achieved (if applicable)

Learning Objectives

• Recognize and apply the AICPA's Proposed Standards on Audit reporting which address the area of disclosures and auditor reporting
• Identify several issues with auditing such as materiality, misstatements, and measurements
• Recognize examples of changes to engagement letters, the documentation of the disclosure issues, and the concept of auditing and disclosures
• Differentiate the relationships of the AICPA's auditing standards with those of the PCAOB, and the IAASB
• Identify what has been moved to the front of the auditor's report under the AICPA ASB
• Differentiate AU-C sections and how they apply to auditor disclosures
• Describe the ASB's proposed amendments on disclosures
• Identify correct statements regarding the effective date of the proposed amendments
• Recognize how smaller entities are affected by the proposed disclosures amendments
• Recognize who is responsible for determining and communicating key audit matters in the auditor's report
• Identify why the ASB proposed changes to the auditor reporting model
• Recognize how the proposed amendments affect assertions for presentation and disclosure
• Describe what the proposed amendments do with regard to risks of material misstatement
• Identify reasonable assurance

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Auditing (2 hours)

Program Prerequisites
Basic understanding of generally accepted auditing standards.

Advance Preparation
None