You asked, we delivered. A more flexible attestation standard.
We heard from members. Their clients want them to perform procedures and report in a format similar to an agreed-upon procedures (AUP) engagement, with more flexibility. To be responsive to the needs of our members and the public, the AICPA Accounting and Review Services Committee (ARSC), got together with the Auditing Standards Board (ASB) and developed a new proposed standard, Selected Procedures. If adopted, it will address several practice issues that CPAs are experiencing today and result in a standard that is in the public interest.
Development of the procedures
In an AUP engagement:
- The CPA performs procedures that are established by specified parties.
- The specified parties are responsible for the sufficiency of the procedures for their purposes.
- The engagement letter is required to include agreement on the procedures.
- In circumstances where the procedures evolve or are modified over the course of the engagement, the CPA is required to amend the engagement letter to reflect the modified procedures.
- The practitioner’s report is restricted to the use of those parties that established and agreed on the sufficiency of the procedures
In practice, many CPAs find that the specified parties are unable or unwilling to develop the procedures needed.
The proposal would provide greater flexibility by:
- Allowing the practitioner (or any combination of parties) to develop the procedures.
- Allowing the procedures to evolve during the course of the engagement.
- Not requiring any party to take responsibility for the sufficiency of the procedures.
- Letting users of the CPA’s report make their own determination as to whether the procedures are sufficient for their intended purpose.
- Permitting the issuance of a practitioner’s report that is not restricted as to use.
The proposal would require the CPA to provide the engaging party with the actual procedures performed prior to the issuance of the CPAs report – thus providing an opportunity for the engaging party to provide feedback on the procedures to be performed.
Elimination of the reporting penalty when the CPA does not obtain a written assertion
In an AUP engagement, when the responsible party does not provide the practitioner with a written assertion, the CPA is required to disclose this refusal in his or her report.
In practice, specifically in situations where the engaging party and the responsible party are different, the responsible party may not be in a position to provide a written assertion. Also, in order to provide the written assertion, the engaging party would have had to measure or evaluate the subject matter against the criteria – which is not always practical. The proposed standard does not require the CPA to request or obtain an assertion from any party. This provides flexibility, permitting the CPA to perform the initial measurement or evaluation of the subject matter and still be able to issue an unrestricted report.
The Accounting and Review Services Committee (ARSC) and the Auditing Standards Board (ASB) encourage CPAs to consider the proposed standard and provide feedback. The exposure draft includes a series of questions soliciting feedback on specific key aspects of the proposal and both committees will consider all comments received. Comments should be sent to me at email@example.com by December 1.
Mike Glynn, AICPA Senior Manager, Audit and Attest Services, American Institute of CPAs.
Slinky courtesy of Shutterstock.
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