Statement of Auditing Standards (SAS) No. 133, Auditor Involvement With Exempt Offering Documents, was issued July 26, 2017, and provides performance requirements for auditors involved with documents for exempt offerings such as municipal securities; securities issued by not-for-profit religious, education, or charitable organizations; crowdfunding; small issues of securities such as Regulation A offerings; and franchise offerings. SAS No. 133 will take effect on June 15, 2018; therefore, the content will be testable on the CPA exam beginning July 1, 2018.

Under SAS No. 133, an auditor is considered to “be involved” with documents for exempt offerings if both of the following occur:

  • The auditor’s report on financial statements or the auditor’s review report on interim financial information is included or incorporated by reference in an exempt offering document; and
  • The auditor performs one or more specified activities with respect to the exempt offering document, including:
    • assisting the entity in preparing information included in the exempt offering document.
    • reading a draft of the exempt offering document at the entity’s request.
    • issuing a comfort or similar letter in accordance with AU-C Section 920, or an agreed-upon procedures report in accordance with AT-C Section 215, in lieu of a comfort letter or similar letter on information included in the exempt offering document.
    • participating in due diligence discussions with underwriters, placement agents, broker-dealers, or other financial intermediaries in connection with the exempt offering.
    • issuing a practitioner’s attestation report on information relating to the exempt offering.
    • providing written agreement for the use of the auditor’s report in the exempt offering document.
    • updating an auditor’s report for inclusion in the exempt offering document.

The auditor is required to perform a specific set of procedures, and respond appropriately, if the auditor determines the information included or incorporated by reference in the exempt offering document could undermine the credibility of the financial statements and the auditor’s report. Auditors must also respond to any facts they learn after the date of the auditor’s report that, if they had been known at that time, could have caused the auditor to revise the report.

Additionally, auditors need to understand any procedures that management performed to identify subsequent events, and inquire of management and those charged with governance about whether any such events have occurred that might affect the financial statements. Further procedures required to be completed by the auditor might include reading the minutes of management meetings that have been held since the date of the auditor’s report and asking about the matters discussed at those meetings. Auditors should also read the entity’s most recent subsequent interim financial statements, if there are any.

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Susan J. Cox, M.Acc., CPA is a Senior Technical Editor for Surgent CPA Review. Susan received her graduate and undergraduate degrees from Florida State University. Prior to joining Surgent, Susan worked as a technical editor for Thomson Reuters, an accounting instructor for the University of South Florida, a senior internal auditor for GTE, and an experienced senior auditor for Arthur Andersen & Co.