[The following paragraph of AI 11, amended to read as follows, will be effective for audits of fiscal years ending on or after December 15, 2017. See PCAOB Release No. 2017-001. The current auditing interpretations can be found here.]

.21     Interpretation—When other relevant evidential matter exists, the auditor should consider it before reaching a conclusion about the appropriateness of management’s accounting for a transfer. ¹⁴ However, since the isolation aspect of surrender of control is assessed primarily from a legal perspective, the auditor usually will not be able to obtain persuasive evidence in a form other than a legal opinion. In the absence of persuasive evidence that a transfer has met the isolation criterion, derecognition of the transferred assets is not in conformity with generally accepted accounting principles and the auditor should consider the need to express a qualified or adverse opinion in accordance with paragraphs .18 through .43 of AS 3105, Departures from Unqualified Opinions and Other Reporting Circumstances. However, if permission for the auditor to use a legal opinion that he or she deems otherwise adequate is not granted, this would be a scope limitation and the auditor should consider the need to express a qualified opinion or to disclaim an opinion in accordance with AS 3105.05–.09 and AS 3105.44–.47.

¹⁴     See AS 1210.13 as to additional procedures that may be applied.

[Effective pursuant to SEC Release No. 34-81916, File No. PCAOB-2017-01 (October 23, 2017)]