July 10, 2019
Published: Journal of Accountancy
By Jeff Drew
The AICPA on Wednesday issued new professional standards for members who perform forensic accounting services engagements.
The Statement on Standards for Forensic Services No. 1 (SSFS 1) provides authoritative guidance for AICPA members providing litigation and investigative services. Specifically, the statement defines litigation and investigation for accounting purposes, outlines key considerations for client and provider relationships, and establishes boundaries on the services members can provide.
The standards were developed by the AICPA’s Forensic and Valuation Services (FVS) Executive Committee.
“These new forensic standards are the first time we are codifying best practices for litigation and investigation consulting work,” committee chair Annette Stalker, CPA/CFF, said in a news release. “Forensic accounting is a diverse practice, and this standard is unique because it is applied based on why a service is provided — litigation or investigation — rather than what skill set is employed.”
The standards issued Wednesday define the forensic services provided for “investigation” or “litigation” as follows:
– Investigation is a service performed in response to concerns of wrongdoing in which the AICPA member is engaged to perform procedures to collect, analyze, evaluate, or interpret certain evidential matter to assist the stakeholders (for example, client, board of directors, independent auditor, or regulator) in reaching a conclusion on the merits of the concerns.
– Litigation is an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties. The term litigation as used herein is not limited to formal litigation but is inclusive of disputes and all forms of alternative dispute resolution.
SSFS 1 also includes prohibitions on opining on the occurrence of fraud and performing certain forensic services for a contingent fee. The new standards, which apply to all AICPA members, AICPA member firms, and employees of AICPA member firms, take effect for new engagements accepted on or after Jan. 1, 2020. Early adoption is permitted.