The American Institute of CPAs’ Auditing Standards Board has decided to defer the effective dates of seven of its recently issued Statements on Auditing Standards because of the novel coronavirus pandemic.
The standards, SAS Nos. 134-140, will be postponed for one year and are now generally effective for audits of calendar year-end 2021 financial statements of privately held companies.
“The AICPA has heard from numerous small and mid-size CPA firms that they and their clients are struggling due to the pandemic,” said AICPA chief auditor Bob Dohrer in a statement Monday. “We understand that many firms may not have the time or resources to focus on effective implementation of SAS Nos. 134-140 this year. We hope the deferral will offer firms relief and an opportunity to implement the standards in the highest quality manner possible when the distractions from the pandemic have diminished.”
The decision to delay the standards came during a special two-hour open meeting, during which members of the Auditing Standards Board discussed and voted to defer the effective dates of SAS Nos. 134 through 140. Some of the standards substantially change the auditor’s report, and also cover other matters.
The standards affected are:
- SAS
134 , Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended; - SAS
135 , Omnibus Statement on Auditing Standards—2019; - SAS
136 , Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended; - SAS
137 , The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports; - SAS
138 , Amendments to the Description of the Concept of Materiality; - SAS
139 , Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134; and - SAS
140 , Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137.
The effective dates of the standards were for audits of private company financial statements for periods ending on or after Dec. 15, 2020. The deferral means that effective dates now apply for periods ending on or after Dec. 15, 2021.
“For those standards where there was a prohibition against early implementation, the ban has been lifted so that firms that are prepared to implement the standards this year will be permitted to do so,” said Dohrer.
For more on the AICPA’s Coronavirus audit and accounting resources,
Separately on Monday, the AICPA sent seven recommendations to the Treasury Department and the Internal Revenue Service asking for more clarity and guidance on how small businesses should apply certain employee retention credit provisions in the CARES Act.
The AICPA wants more guidance on the following issues:
1. Permit the deduction for an employer’s social security tax obligation before applying the credit.
2. Offer guidance on the deferral of the payment of social security taxes.
3. Clarify in situations when an employee works a reduced schedule, but still gets paid their regular wage, if part of the employee’s wages and qualified health care costs can be claimed as a credit. This treatment would be consistent with guidance issued by the Labor Department related to the Families First Coronavirus Response Act.
4. Offer more guidance on the definition of a “partial” suspension of operations for purposes of Section 2301 of the CARES Act.
5. Define the term “trade or business” for purposes of Section 2301 of the CARES Act. An employer can have one division suspended under a government order, while other parts of the business stay open. It’s unclear if the suspension test is applied to each trade or business in which the employer operates or if the situation is considered a partial suspension. It’s clear that the gross receipts test applies to all activities but use of the term “trade or business” with the suspension language is unclear.
6. Clarify whether an employer aggregated under the aggregation rules under Section 2301 of the CARES Act is barred from utilizing the retention credit if another related entity (under the section 52 rules) receives a Small Business Administration loan.
7. Clarify whether a not-for-profit organization which has not been fully or partially suspended can use the gross receipts test to qualify for payment of retention pay. Section 2301(c)(2)(C) of the CARES Act implies that it cannot, but the second item on the IRS’s FAQ page suggests that it can.
“This is the latest of many steps AICPA has taken to create a greater understanding of the CARES Act,” said AICPA vice president of taxation Edward Karl in a statement Monday. “AICPA’s recommendations will provide more direction and support for small businesses and their employees so they can concentrate on resuming operations to assist in the revitalization of the economy.”
Along with those recommendations, the AICPA is providing some useful resource pages for accountants:
SBA Paycheck Protection Program resources for CPAs Coronavirus (COVID-19) tax policy & advocacy resources Main coronavirus resource center
