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AICPA Board Votes to Finalize Proposed Guidance on Auditors’ Use of Specialists

Soyoung Ho  Senior Editor, Accounting and Compliance Alert

Soyoung Ho  Senior Editor, Accounting and Compliance Alert

The AICPA’s Auditing Standards Board (ASB) voted to finalize a proposal that would give more guidance to auditors on the use of specialists for complex accounting estimates, including fair value instruments during a videoconference meeting held on May 11-13, 2021.

The final standard will be Statement on Auditing Standards (SAS) No. 144, Amendments to AU-C sections 501, 540 and 620 Related to the Use of Specialists and the Use of Pricing Information Obtained From External Information Sources, according to Ahava Goldman, associate director for audit and attest standards with the Association of International Certified Professional Accountants, on May 20.

SAS 144 amends AU-C Section 540Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, by adding a new appendix, Use of Pricing Information From Third Parties as Audit Evidence.

This “provides guidance on the use of pricing information obtained from external information sources to be used as audit evidence for estimates related to the fair value of financial instruments,” Goldman noted.

The final standard revises application sections in AU-C Section 501Audit-Evidence–Specific Considerations for Selected ItemsAU-C Section 620Using the Work of an Auditor’s Specialist, and SAS No. 143Auditing Accounting Estimates and Related Disclosures.

Amended AU-C Section 501 provides guidance on applying AU-C Section 540 when management uses the work of a specialist for accounting estimates.

Amended AU-C Section 620 improves the guidance when using the work of an auditor’s specialist.

The exposure draft was issued in November last year in Proposed SAS Amendments to AU-C Sections 501, 540, and 620 Related to the Use of Specialists and the Use of Pricing Information Obtained From External Information Sources.

The proposed SAS addressed comments received on the exposure draft that resulted in the July 2020 publication of SAS No. 143, which superseded SAS No. 122, AU-C Section 540. This revised standard is intended to improve audits of accounting estimates and encourage auditors to exercise professional skepticism. (See AICPA Proposal Would Add Guidance on Auditors’ Use of Specialists in the November 5, 2020, of Accounting & Compliance Alert.)

The work on the project comes as the PCAOB also issued a couple of related standards: Release No. 2018-006Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists, which revised PCAOB standards to strengthen requirements for the auditor’s use of specialists, such as actuaries and engineers; and Release No. 2018-005Auditing Accounting Estimates, Including Fair Value Measurements, which is designed to improve audits of accounting estimates.

The AICPA tries to eliminate unnecessary differences between the two sets of standards. The PCAOB writes rules for audits of publicly listed companies while the ASB sets standards for private company audits.


This article originally appeared in the May 21, 2021 edition of Accounting & Compliance Alert, available on Checkpoint.

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