A5 M3 Attestation Engagements and Standards

Definitions and Key Concepts

Attest engagements involve a practitioner issuing an examination, review, or agreed-upon procedures report on a subject matter or assertion that is another party's responsibility.

Attestation Engagements (Applicability and Scope)

SSAE standards apply to agreed-upon procedures, prospective financial statements, pro forma financial statements, compliance, MD&A, and service organization reports, but do not apply to audits, SSARS preparations/compilations/reviews, tax returns, litigation support, consulting, or ICFR audits.

Overview (Attestation Standards)

Attestation standards provide guidance and boundaries for CPA attestation services, extending GAAS without referencing historical financial statements or GAAP, and allow for tailored, limited-use reports.

Common Concepts

General standards for all attestation engagements covering compliance with SSAE, independence, acceptance/continuance, preconditions, documentation, engagement changes, work of other practitioners, quality management, professional skepticism, and professional judgment.

Attestation Risk

The risk that a practitioner expresses an inappropriate opinion or conclusion on materially misstated subject matter information, consisting of inherent risk, control risk, and detection risk (does not apply to agreed-upon procedures).

Additional Reporting Requirements

Reports can be issued on either the assertion or the underlying subject matter, but material misstatements or deviations require modifying the report and expressing the conclusion directly on the subject matter.

Scope Restrictions

Scope limitations in an examination result in a qualified opinion, disclaimer, or withdrawal, whereas scope limitations in a review result in mandatory withdrawal.

Assertion-Based Examination Engagements

An engagement providing reasonable (positive) assurance where a party other than the practitioner evaluates the subject matter and provides an assertion, after which the practitioner expresses an opinion.

Direct Examination Engagements

An engagement providing reasonable assurance where the practitioner directly measures or evaluates the underlying subject matter against criteria without receiving a management assertion.

Review (Limited Assurance)

An engagement providing limited (negative) assurance based primarily on inquiry and analytical procedures to express a conclusion on whether material modifications are needed.

Summary of SSAE Engagements

Examinations provide reasonable assurance (opinion), reviews provide limited assurance (conclusion), and agreed-upon procedures provide no assurance (list of findings)

Written Assertion

A written statement usually obtained from management; failure to provide it when the client is the responsible party represents a scope limitation requiring withdrawal or report modification.

Other Requirements

Attestation engagements require documentation standards, establishing a written understanding with the client, obtaining a management representation letter, and inquiring about subsequent events.