The American Institute of Certified Public Accountants (“AICPA”) Auditing Standards Board issued Statement on Auditing Standards No. 138 and Statement on Standards for Attestation Engagements No. 20 to amend the concept of materiality in the context of both audits of financial statements and attestation engagements. Under the previous standards, misstatements, including omissions, were considered to be material if they, individually or in the aggregate, “could reasonably be expected to influence the economic decisions of users.” The new standards require that there be “a substantial likelihood that [misstatements or omissions] would influence the judgment” made by certain users, which is in greater alignment with the definitions of materiality used by the Supreme Court, the Public Company Accounting Oversight Board, the Securities and Exchange Commission and the Financial Accounting Standards Board. The standards are effective for audits of financial statements for periods ending on or after December 15, 2020 and for practitioners’ examination and review reports dated on or after December 15, 2020.
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