The AICPA on June 22 published the 2021 edition of the Audit and Accounting Guide (AAG): State and Local Governments (aag-slg).

The organization said that state and local government audit and accounting is changing rapidly, and the guide will help practitioners stay informed. The guide features insights and best practices for some of the more complex areas such as leases, fiduciary activities, pensions and post-employment benefits other than pensions.

Other topics covered include:

  • Financial reporting and the financial reporting entity
  • Revenue and expense recognition
  • Capital asset accounting
  • The elements of net position
  • Accounting for fair value
  • Municipal securities offerings
  • Tax abatements

The 2021 guide also reflects changes as a result of changes the AICPA’s Auditing Standards Board made with the publication of Statements on Auditing Standards (SASs) No. 134 through 140. The effective date is audits of financial statements for periods ending on or after Dec. 15, 2021.

The standards include expanded auditor reporting to make the auditor’s reports more useful to investors.

For example, SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, has a section that addresses the auditor's responsibility to communicate key audit matters (KAMs) in the auditor's report only when the auditor is engaged to do so. The section addresses both the auditor's judgment about what to communicate in the auditor’s report and the form and content of the communication.

“For auditors that are not early implementing SAS Nos. 134–140, it will be necessary for auditors to look back to the 2020 AICPA Audit and Accounting Guide State and Local Governments (as of April 1, 2020) for the auditing guidance and illustrative auditor reporting in effect prior to SAS Nos. 134–140,” the AICPA stated.

The 2020 edition of the guide remains available in all formats, the AICPA said.

“This edition of the guide is relevant to auditors that have implemented SAS Nos. 134–140 early and generally for all audits of financial statements for periods ending on or after Dec. 15, 2021 (or as specified by the individual standard).”

The standards are:

  • SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended
  • SAS No. 135, Omnibus Statement on Auditing Standards—2019
  • SAS No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended
  • SAS No. 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports
  • SAS No. 138, Amendments to the Description of the Concept of Materiality
  • SAS No. 139, Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134
  • SAS No. 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137

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