AICPA Revises Description of Materiality

The AICPA’s Auditing Standards Board has published Statement on Auditing Standards (SAS) No. 138, Amendments to the Description of the Concept of Materiality, and Statement on Standards for Attestation Engagements (SSAE) No. 20 by the same name.

The new standards change the description of materiality used in AICPA Professional Standards to make it consistent with the definition used by the U.S. judicial system, PCAOB, SEC, and FASB (formerly, the definition was aligned with that used by the IASB and IAASB). The AICPA’s revised description of materiality states, in part, that “misstatements, including omissions, are material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.”

SAS 138 and SSAE 20 are effective for periods ending, or for practitioners’ examination or review reports dated, on or after December 15, 2020, respectively.

For more information, see the press release on the AICPA’s Web site.