The AICPA’s Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 138, Amendments to the Description of the Concept of Materiality, and Statement on Standards for Attestation Engagements (SSAE) No. 20 of the same title, to respectively amend various AU-C and AT-C sections in AICPA Professional Standards.
The ASB’s current description of the concept of materiality is consistent with the definition of materiality used by the IASB and the International Auditing and Assurance Standards Board (IAASB). SAS 138 and SSAE 20 align the materiality concepts discussed in AICPA Professional Standards with the description of materiality used by the U.S. judicial system, the auditing standards of the PCAOB, the SEC, and the FASB.
The ASB believes “it is in the public interest to eliminate inconsistencies between the AICPA Professional Standards and the description of materiality used by the U.S. judicial system and other U.S. standard setters and regulators.”
In addition, the ASB believes that, “because the revised definition is aligned with the FASB, the revised description is substantially consistent with current U.S. firm practices with respect to determining and applying materiality in an audit or attest engagement and, accordingly, the amendments are neither expected nor intended to change U.S. practice.”
SAS 138 and SSAE 20 are effective for periods ending, or for practitioners’ examination or review reports dated, on or after December 15, 2020, respectively.
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