AICPA issues standard on performing examination engagements

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The American Institute of CPAs’ Auditing Standards Board issued an attestation standard for when auditors perform examination engagements with clients.

The AICPA’s Standards for Attestation Engagements (SSAE) No. 21 adds a new section to the AICPA Professional Standards, designated as AT-C section 206, Direct Examination Engagements.

SSAE No. 21 allows practitioners to offer an opinion, even if another party who is responsible for the underlying subject matter hasn’t first measured or evaluated the subject matter. The service will help auditors deal with new and emerging nonfinancial subject matters, as many companies might not have the necessary expertise in-house to measure or evaluate a complex, emerging subject matter. In this new direct examination engagement, the responsible party (usually the client) isn’t required to measure or evaluate the underlying subject matter against criteria and isn’t required to provide a written assertion to the practitioner. However, the responsible party is still required to acknowledge responsibility for the underlying subject matter.

“While maintaining the ability to perform traditional ’assertion-based’ examination engagements, this new engagement allows practitioners to use their highly valued skills and expertise to measure or evaluate different types of nonfinancial subject matters against criteria and report the results of their work directly to users, thereby furthering the public interest,” said AICPA Auditing Standards Board chair Tracy Harding in a statement Wednesday. “The entity responsible for the underlying subject matter is not required to expend resources in measuring or evaluating the subject matter against criteria. The new service is expected to be useful given the ever-expanding types and complexities of nonfinancial subject matters.”

The new SSAE amends AT-C section 105, Concepts Common to All Attestation Engagements, principally for new terminology. It also supersedes and renames AT-C section 205 to Assertion-Based Examination Engagements. In addition, SSAE No. 21 supersedes AT-C section 205 to differentiate it from AT-C section 206, although both types of examination engagements are reasonable assurance engagements. Revised AT-C section 205 continues to enable practitioners to perform traditional assertion-based examination engagements.

SSAE No. 21 takes effect for practitioner reports dated on or after June 15, 2022, although early implementation is allowed.

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