TIS Section 9110, Special Reports

December 2012
AICPA Technical Practice Aids
TIS Section 9110,
Special Reports
.20 Effective Date of AU-C Section
905 in a Compliance Audit
Inquiry—AU-C section 905 is “effective for the auditor’s written communications related to audits of
financial statements for periods ending on or after December 15, 2012. For all other engagements conducted
in accordance with GAAS, this section is effective for the auditor’s written communications issued on or after
December 15, 2012.”
Which effective date applies in a compliance audit performed pursuant to AU-C section 935, Compliance
Audits (AICPA, Professional Standards), and Office of Management and Budget Circular A-133, Audits of
States, Local Governments and Non-Profit Organizations (Circular A-133), in which the financial statements of
an entity are for a period prior to December 15, 2012 (for example, as of and for the year ended September
30, 2012), but the opinion on compliance and reporting on internal control over compliance (the Circular A133 report) relating to that same period is issued after December 15, 2012 (for example, the Circular A-133
report is issued on January 15, 2013)?
Reply—Some auditors view the compliance audit performed pursuant to AU-C section 935 and Circular
A-133 as related to the audit of the financial statements because Circular A-133 also requires a financial
statement audit. Other auditors view the compliance audit as being unrelated to the financial statement
audit. Generally, both views may be reasonable. Therefore, the effective date used depends on the auditor’s
professional judgment of the circumstances. If, in the auditor’s professional judgment, the compliance audit
relates to the audit of the financial statements, AU-C section 905 would not apply and the auditor would use
the restricted use alert language required by AU section 532, Restricting the Use of an Auditor’s Report [SAS
No. 87], in the Circular A-133 report. However, if, in the auditor’s professional judgment, the compliance
audit is unrelated to the audit of the financial statements, AU-C section 905 applies and the auditor’s Circular
A-133 report would use the intended use alert language required by paragraph .11 of AU-C section 905.
It should be noted that a Circular A-133 report for periods ending on or after December 15, 2012, should
implement the intended use alert language required by paragraph .11 of AU-C section 905.
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Finally, with regard to the reporting issued to satisfy the requirements of Government Auditing
Standards on internal control over financial reporting, and compliance and other matters, which is also
required in a Circular A-133 compliance audit, such reporting is related to the audit of the financial
statements. Therefore, the auditor would continue to use the restricted use alert language required by AU
section 532 [SAS No. 87] when reporting on periods prior to December 15, 2012.
[Issue Date: December 2012.]
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