SAS Forming an Opinion and Reporting on Financial Statements

a) SAS Forming an Opinion and Reporting on Financial Statements

(1) Addresses the auditor’s responsibility to form an opinion on the financial statements as a whole.

(2) Addresses the form and content of the auditor’s report issued as a result of an audit of financial statements and is written in the context of a complete set of general purpose financial statements, prepared in accordance with a fair presentation framework.

(3) Specifically addresses situations when the auditor would be expressing an unmodified opinion on the financial statements and establishes the basic form of the auditor’s report. This proposed SAS also includes requirements and application material related to auditing and reporting on comparative financial statements.

(4) Comparative Financial Statements

(a) Extant AU section 508 includes guidance on comparative financial statements, which are common in the United States.

(b) The ISAs address comparative information in a separate standard—ISA 710.

(c) ISA 710 addresses reporting circumstances in other jurisdictions that are not relevant in the United States, including corresponding figures that are not covered by the auditor’s report.

(d) The ASB decided to include the requirements and guidance for comparative financial statements in this proposed SAS rather than have a separate SAS.

(e) The ASB believes that combining the guidance related to comparative financial statements and the guidance for issuing an auditor’s report in connection with an audit of financial statements will assist auditors when reporting in the United States.

(5) Auditor’s Signature

(a) Paragraph 37 of the SAS Forming an Opinion and Reporting on Financial Statements, consistent with ISA 700, Forming an Opinion and Reporting on Financial Statements, requires the auditor’s report to include the manual or printed signature of the auditor’s firm.

(b) In regard to this requirement, the ASB discussed the U.S. Treasury Department’s Advisory Committee on the Auditing Profession report, “Final Report of the Advisory Committee on the Auditing Profession to the U.S. Department of the Treasury” (Treasury Report) that was issued on October 6, 2008.

(c) This report urged the Public Company Accounting Oversight Board (PCAOB) to “undertake a standard-setting initiative to consider mandating the engagement partner’s signature on the auditor’s report.”

(d) The ASB discussed the recommendations in the Treasury Report and decided that it would not be appropriate for auditors of nonpublic companies to include the engagement partner’s signature in the auditor’s report.

(e) The SAS retains the requirement, consistent with ISA 700 and extant AU section 508 paragraph .08(i) to include the manual or printed signature of the auditor’s firm in the auditor’s report.