A municipal water authority asks a CPA firm to report on its sustainability metrics (gallons recycled, energy used per gallon treated) under the framework cited in its bond offering. The board wants the highest level of assurance the firm can give. The exam question is not whether the firm can audit the financial statements; it is which attestation engagement fits (assertion-based examination, direct examination, or review), what report the practitioner issues, and what the language has to say.
HIGH-FREQUENCY: Statement on Standards for Attestation Engagements No. 19 (SSAE 19) organizes attestation work into three engagement types: examination, review, and agreed-upon procedures. Each can be performed on subject matter beyond historical financial statements: prospective financial statements (forecasts and projections), pro forma financial statements, MD&A, internal control over financial reporting, compliance with laws or regulations, and sustainability metrics are the subjects the exam returns to most often.
SSAE 19 gives the practitioner three calibrated tools to match the assurance level the user wants with the work the practitioner performs.
Common mistakes
- Treating examination and audit as the same engagement. They share rigor, but an audit applies to historical FS under GAAS; an examination applies to non-financial-statement subject matter under SSAE 19. Watch for trap answers using audit terminology in an attestation context.
- Assuming independence is not required for a review. Independence is required for both examination and review. Only SSARS compilation and preparation engagements allow impaired independence, and those are not attestation engagements.
- Conflating SSAE 19 reviews with SSARS reviews. SSARS reviews cover historical FS of nonissuers under AR-C 90. SSAE 19 reviews cover other subject matter under the attestation standards. Similar wording, different standards and subject matter.
Bottom line
- SSAE 19 governs attestation engagements: examinations, reviews, and agreed-upon procedures (AUP) on subject matter other than historical financial statements.
- Examination provides the highest level of attestation assurance, with an opinion in positive form ("In our opinion, the [subject matter] is in accordance with the [criteria]").
- Review provides limited assurance, with a conclusion in negative form ("Based on our review, we are not aware of any material modifications that should be made").
- Examination uses risk assessment, evidence procedures, and rigor similar to an audit; review relies primarily on inquiry and analytical procedures.
Exam shortcut
When a question asks which engagement matches a stated assurance level, map the cue: "high assurance" or "opinion" = examination; "limited assurance" or "we are not aware of any material modifications" = review; "no assurance, specified procedures" = AUP. The vocabulary in the question stem usually points directly at one of the three. When a question describes a forecast or projection going to general users, the answer is an examination.
The full lesson (about 1,871 words, 12 min read) adds 1 worked example, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- IV.B1
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