2019 Commercial Entities Updated

Who’s ready for 2019 Commercial Audits? It’s that time of year again. Check out the updates and enhancements to 2019 Knowledge-Based Audit of Commercial Entities. In July 2019, this title is available for CCH ProSystem fx Knowledge Coach. Get up to speed on the changes and get ready to increase your realizations and improve your client service!

Coming changes

What changes are coming, based on the latest literature, standards, and guidance? The 2019 Knowledge-Based Audit of Commercial Entities will include:

  • AICPA Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements
  • SAS No. 135, Omnibus Statement on Auditing Standards – 2019.

Additionally, the title incorporates new steps and tailoring questions to:

  • AUD-807 Audit Program: Property and Equipment, and Depreciation
  • AUD-811 Audit Program: Debt Obligations to document new/revised lease guidance under ASU No. 2016-02, Leases (Topic 842)

Furthermore, new:

  • Tips are included regarding Omnibus Statement on Auditing Standards for the issuance of SAS-135
  • Steps and tailoring questions in AUD-803 Audit Program: Accounts Receivable and Revenue to incorporate procedures performed under ASC Topic 606
  • AUD-910 Audit Program: Specific Element, Account or Item of a Financial Statement in Accordance with AU-C 805, for auditors performing engagements under AU-C 805

What else is new?

Along with striving for compliance, we also look for ways to improve our users’ workflow and auditing experience. With that in mind, you’ll also see these changes, beginning with the 2019 Commercial title:

  • Removing all Noncomplex forms (KBA-201N, KBA-302N, and KBA-401N) and combining these with the Complex forms. This gives the auditor the option to memo or complete the detailed table for each section based on tailoring.
    • Please note, for those who used a Noncomplex document in your prior engagement, before rolling that file forward you must add the Complex document to your engagement binder. However, if your binder is already finalized -OR- you do not want to un-finalize the binder and insert the Complex document before you roll forward from the 2018 version, then you must copy/paste your data from the Noncomplex document after you roll forward, if applicable. Further, note that the Noncomplex document will roll forward as the old version, and will need to be removed after obtaining any data from it for the new combined document.
  • Removing Section I: Entity Information from KBA-302 Understanding the Entity and Its Environment as this information is duplicated at KBA-200 Entity Information and Background.
  • Adding flow of columns, “Nature of Other Services” and “Firm Personnel Overseeing the Service” from KBA-101 Overall Audit Strategy to AID-201.
  • Adding table “Prior Year Substantive Matters and Significant Findings” to KBA-102 Engagement Completion Document. This table is only user entry if the user would like to document prior year matters or findings.
  • Adding flow of question, “Describe the users or expected users of the financial statements (e.g., owners, stakeholders, lenders): from KBA-200 Entity Information and Background to KBA-301 Worksheet for Determination of Materiality, Performance Materiality, and Thresholds for Trivial Amounts where this table was added.

What’s new – con’t

  • Adding flow of Component Units from AID-603 to KBA-301 if the user has noted the Component Unit as being “Significant” in one of the four columns in AID-603
  • New column of KBA-301 in step 4: Determination of the Threshold for “Trivial Amounts” for the user to document the “Trivial Amount”. User will need to manually key in this number based on calculation as this new column will trigger flow of the “Trivial Amount” to the materiality tables located within other forms.
  • Adding new table to trigger flow of items identified to KBA-400 Scoping and Mapping of Significant Account Balances, Classes of Transactions, and Disclosures. All items identified in table 2 or 3 of KBA-400 will flow to this new table then the user will decide which to flow to KBA-103. This will help remove duplication in KBA-103.
  • Modifying headers and related instructions regarding compensating controls in KBA-401 Understanding Entity-Level Controls. Due to modifications there will no longer be any show hide of columns in the detailed table based on internal control tailoring questions from AUD-100. Please note that column 7 will be reset on roll forward due to the content changes.
  • Modifying headers and adding one new column (If Controls are Not Effectively Designed and Implemented or Are Not Operating Effectively, Describe the Risks of Material Misstatement) in KBA-402 Understanding General Controls for Information Technology in the “less complex” table. This new column will contain a dynamic list of risks noted in the engagement, like the functioning of KBA-400 and KBA-40X series forms
  • New Potential Error Diagnostic in KBA-502 Summary of Risk Assessments when a user adds a specific risk in the risk pane but the user documents that both “Inherent Risk” and “Control Risk” are low.

Wait, there’s more

  • New Potential Error Diagnostic in KBA-502 when a user selects “Combined” under “Planned Audit Approach” column and the user hasn’t noted they are performing an integrated audit and not testing internal controls overall or for a specific audit area in AUD-100.
  • Adding a table to both KBA-902 Audit Review and Approval Checklist and KBA-905 Review and Approval Checklist: Interim Review of Financial Information to document a concurring partner review, if applicable. A tailoring question has also been added to AUD-100 that will have show/hide functioning on this table in both forms.
  • New missing workpaper or unnecessary workpaper diagnostic related to AID-603 based on your response to tailoring question, “Does the entity have multiple components, multiple locations, or segments that are included in the scope of our engagement?”
  • New audit area, “Business Combinations” has been added throughout the title and AUD-822 Audit Program: Business Combinations has been added
  • Audit area “Journal Entries and Financial Statement Review” has been reworded to “Journal Entries”. The Financial Statement Review steps will no longer be housed in AUD-814 but instead a new form was created: AUD-909 Audit Program: Financial Statement Review. All tailoring questions were removed from AUD-814 as well as none are applicable anymore for that program.
  • Enhanced instructions and procedures throughout the toolset to improve workflow.
  • New workpapers:
    • KBA-901A Tax Basis Financial Statement Disclosure Checklist
    • KBA-901B Cash Basis Financial Statement Disclosure Checklist
    • AID-835 Deferred Tax Analysis
    • AID-846 Journal Entry Testing Worksheet
    • AID-910 Analytical Procedures: Final Account Balance Analysis
    • COR-822A Confirmation of Sales Terms (ASC Topic 606)

Remember, most of these updates and enhancements will also be made to titles following the release of 2019 Commercial Entities.

Begin using KBA Commercial 2019 before your firm upgrades to CCH® ProSystem fx® Engagement v2019.1.1

An application update will release alongside 2019 Commercial. That will allow installation of 2019 Commercial and later titles on Engagement v2018. This step lets Knowledge Coach users begin using the 2019 KBA Commercial title before updating to ProSystem fx Engagement v2019.1.1.

Are you interested in increased realizations and improved client service? Then learn more about our Integrated Audit Approach today.



Wendy Cable

All stories by: Wendy Cable