An attestation engagement produces an examination, review or agreed-upon procedures report concerning subject matter for which another party is responsible. Its scope may involve financial information, operational measures, internal control or compliance, subject to engagement-specific eligibility.
The American Institute of Certified Public Accountants (AICPA) issues Statements on Standards for Attestation Engagements (SSAE) for these service engagements. Statements on Standards for Accounting and Review Services (SSARS) govern preparation, compilation and applicable financial statement reviews for nonissuers.
A review of interim financial information may instead fall under nonissuer auditing standards or Public Company Accounting Oversight Board (PCAOB) standards when their applicability conditions are met. Nonissuer status alone does not place every financial-information review under SSARS.
Classification considers the requested service, subject matter, measurement responsibility, applicable standards and intended reporting output. Issuer status alone does not determine the scope or standards of a separate operational engagement.
The responsible party retains responsibility for the underlying subject matter, such as an entity's operations and their records.
Common mistakes
- Appearance determines the standards. A shipment-count table remains operational information; its tabular presentation does not make it a financial statement.
- Every examination requires an assertion. Practitioner measurement points toward direct examination when that form is available for the subject.
- Inspection means examination. Inspecting one unexplained invoice during a review does not itself change the agreed assurance level.
Bottom line
- Both examination forms provide reasonable assurance; assertion-based examination uses another party's measurement and assertion, while direct examination assigns measurement to the practitioner.
- The responsible party retains underlying subject responsibility, and assurance engagements require suitable available criteria, independence, competence and sufficient appropriate evidence.
- Attestation reviews are unavailable for prospective financial information, internal control and compliance with specified requirements; eligible historical pro forma information can be reviewed.
- Reviews provide limited assurance through inquiry and other appropriate procedures, ordinarily emphasizing analytics, with necessary follow-up and corroboration when warranted.
Exam shortcut
Service selection starts with the requested deliverable: statements, a no-assurance accountant's report, specified findings, a limited-assurance conclusion or an opinion. The subject and applicable standards determine which service can supply it. An operational examination requires identifying who measures the subject and who retains underlying responsibility. Subject-specific requirements determine whether the direct form is available. Review eligibility requires screening for forecasts, projections, controls and compliance.
The full lesson (about 3,796 words, 25 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- I.C3
Browse all free CPA AUD lessons or jump into free CPA AUD practice questions.