Proposed Attestation Standard on MD&A
O ut for exposure is a proposed Statement on Standards for Attestation Engagements (SSAE), Managements Discussion and Analysis , that would provide guidance for practitioners examining or reviewing managements discussion and analysis prepared according to Securities and Exchange Commission rules and regulations. "This is a voluntary, value-added service auditors can offer their clients," said Richard Dieter, a task force member and partner of Arthur Andersen LLP.
"The scope of attestation engagements is increasing. People are looking for assurance on matters outside of historical financial statements," said Beth Schneider, a director at Deloitte & Touche LLP, who staffed the auditing standards board task force that drew up the exposure draft. Dieter added, "I think this proposed SSAE is important because it shows we are moving into more subjective and softer information, which includes disclosure of future demands and uncertainties that can face a business. The ASB views the MD&A attest service as a forerunner to some of the services CPAs areand should beperforming." Emphasizing that such engagements are not required, Dieter said he does not expect the SEC to make it mandatory; he sees the demand for this service coming initially from underwriters in connection with securities offerings.
John Fogarty, the task force chairman and partner of Deloitte & Touche LLP, said, "In considering whether to develop a standard, the ASB considered the possible needs of users for assurance with respect to the various components of the Comprehensive Model for Business Reporting proposed by the AICPA Special Committee on Financial Reporting. The proposed standard also will provide a useful framework for future assurance services in that area."
Schneider said an examination or review of MD&A can be performed under existing standards, but noted there was little guidance in areas specific to an MD&A presentation. "The proposed SSAE addresses numerous issues that a practitioner would face in performing such an engagement."
For more information on MD&A, see "FASAB Issues MD&A Proposal."
The exposure draft is available from the AICPA order department,
800-862-4272. It is also posted on AICPA Online and the Accountants
Forum. The exposure period runs until June 16, and the ASB hopes to
complete a final standard by December 1997.