On October 23. 2017, the SEC approved a new PCAOB standard, AS 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. The new standard will result in the first significant changes to auditor reporting in over 70 years. Similar changes have been made in recent years to auditor reporting in other countries. The standard is the result of a multi-year PCAOB effort that began in 2010, which included several exposures for public comment and other public outreach.
The new standard retains the existing “pass/fail” opinion, but makes significant changes to the form and content of the auditor’s report for public companies. For example, auditors will be required to disclose audit firm tenure and make other changes to the wording of reports to clarify the auditor’s role and responsibilities. These initial changes will come into effect for auditor’s reports as of the 2017 calendar year end. Starting in 2019 for certain audits, auditors will be required to include a description of critical audit matters, as defined, in their reports.
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