The American Institute of Certified Public Accountants (“AICPA”) recently issued the Statement on Standards for Forensic Services No. 1 (“SSFS 1” or the “standard”), which has an effective date for engagements accepted on or after January 1, 2020. The standard applies to any member of the AICPA, or employee of a member firm, who provides services to a client as part of a litigation or investigation engagement.
For purposes of the standard, a litigation engagement is defined as:
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 dispute resolution.
An investigation engagement is further defined as:
A matter conducted in response to specific concerns of wrongdoing in which a 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.
As demonstrated by these definitions, the key consideration regarding applicability of SSFS 1 is the purpose for which a member is engaged (i.e., in a litigation or investigative engagement), rather than a specific skill set or service provided.
When a member accepts an engagement that meets one or both of the definitions set forth above (herein after referred to as a “forensic engagement”), the member is required to undertake all work with:
In addition to the requirements set forth above, SSFS 1 also requires that:
Why is the standard important and relevant?
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Dave Duffus is a member of the AICPA’s Forensic & Litigation Services Committee and had the opportunity to provide input into the standard during its development.