Comment letter: Auditor's responsibilities in annual reports

May 15, 2018

Ms. Sherry Hazel Auditing Standards Board

American Institute of Certified Public Accountants

1211 Avenue of the Americas

New York, NY 10036-8775

Proposed Statement on Auditing Standards, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports

Dear Ms. Hazel:

We appreciate the opportunity to comment on the exposure draft referenced above.

By way of background, Baker Tilly Virchow Krause, LLP is a large, nationally recognized accounting firm operating primarily in the Midwest and Northeast regions of the United States. We have approximately 300 partners and employ more than 2,700 persons. Our practice is diverse, offering accounting and auditing services as well as tax and consulting services across a broad spectrum of industries and geographies.

Effective Date

We believe an effective date of less than a year from the date that the proposed standard is finalized will not allow auditors sufficient time to update their audit methodologies. Therefore, we recommend that the proposed effective date be at least one year from the date that the proposed standard is finalized.

Our remaining comments will be in the form of responses to specific questions included in the exposure draft.

Specific Request for Comment 1

Do the proposed revisions clarify the scope of documents required to be subjected to the auditor’s procedures? If you believe additional revisions or guidance is necessary, please be specific and provide reasons why additional revisions or guidance is necessary.

We believe the proposed definition of “annual report” will result in inconsistent application and conclusions, and therefore, should be further clarified. The definition states that an annual report, “…usually includes information about the entity’s developments, its future outlook and risks and uncertainties, a statement by the entity’s governing body, and reports covering governance matters.” When entities issue documents, or a combination of documents, that include some, but not all, of these elements, or issue documents with elements similar to these elements, but not exactly the same as these elements, we believe that auditors will have a difficult time determining whether the documents, or combination of documents, meet the proposed standard’s definition of an annual report.