AICPA Issues SAS No. 134 to Enhance Communicative Value of Auditors’ Reports

AAFCPAs would like to make our privately-held commercial clients and nonprofits aware that on May 08, the AICPA Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 134, designed to enhance the communicative value of the auditor’s report and align generally accepted auditing standards (GAAS) with the standards issued by the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB).
The SAS becomes effective for audits of financial statements for periods ending on or after December 15, 2020. Early implementation is not permitted.
The most notable changes of SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements are the form and content of the auditor’s report. The standard also contains requirements for when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary, and when additional communications are necessary in the auditor’s report.
SAS No. 134 provides for the auditor’s “Opinion” section to precede the “Basis for Opinion” section in the auditor’s report.
Further, SAS No. 134 provides that the “Basis for Opinion” section is now required for all reports, not limited to those with modified opinions. The “Basis for Opinion” section will be specific in intent and is designed to set users’ expectations for the auditor’s report.
SAS No. 134 includes the following:

  • Indication that the audit was conducted in accordance with generally accepted auditing standards (GAAS) and identify the United States as the country of origin of those standards
  • Refer to the section of the auditor’s report that describes the auditor’s responsibilities under GAAS
  • Include a statement that the auditor is required to be independent of the entity and to meet other ethical responsibility requirements
  • Indicate whether the auditor believes the audit evidence obtained is sufficient and appropriate to provide a basis for the auditor’s opinion

SAS No. 134 does not require reporting of key audit matters in an engagement as does the audit report of a public company, but the standard does provide reporting requirements for communication of key audit matters in the auditor’s report when the auditor is engaged to do so.

What do we advise?

AAFCPAs advises clients to share this regulatory update with users of your financial statements to make them aware now of this new opinion and change in the presentation of information in the Auditor’s Report. We also encourage you to communicate the ASB’s purpose behind this change, which is to add visibility and provide transparency into the basis for the auditor’s opinion and the responsibilities of both entity management and auditors.
If you have any questions please contact Jeffrey Mead, CPA, CGMA, Partner at 774.512.4143,, or your AAFCPAs Partner.

About the Author

Jeff Mead, Audit Partner
Jeffrey is a Partner and leader of AAFCPAs’ Commercial Practice, providing proactive audit/assurance, tax, and advisory solutions for closely-held and privately-owned businesses. His diverse commercial client base includes: professional service firms, technology companies, publishers, and manufacturers/distributors.