Auditing / Attest

  The AICPA governing Council approved a resolution to change the definition of attest—a key step in an effort to promote the quality of services for both clients and the greater public.

The AICPA in partnership with the National Association of State Boards of Accountancy (NASBA) is seeking to amend the definition of attest in the Uniform Accountancy Act (UAA), the profession’s model state accounting law. The amendment would require that only CPAs operating within a CPA firm could perform audits in accordance with Statements on Auditing Standards (SASs); reviews under Statements on Standards for Accounting and Review Services (SSARSs); and examinations, reviews, and agreed-upon procedures under Statements on Standards for Attestation Engagements (SSAEs).

The UAA specifically states that its provisions do not prohibit public officials and public employees from performing any of their duties, and there are no plans to amend this provision. Thus, for example, state audit organizations that currently perform engagements under the SASs, SSARSs, and the SSAEs will continue to be able to do so without restriction.

Following the approval given at the spring Council meeting, the joint UAA committee, composed of AICPA and NASBA members, drafted new proposed language. NASBA’s board approved the language. The AICPA board’s vote on this subject did not occur as of press time. If the AICPA board approves the language, subsequent steps would be:

  • Issuing a joint public exposure draft with a 90-day comment period.
  • Following the comment period, the UAA committee would meet again and make any revisions.
  • Returning the proposal to the AICPA and NASBA boards for a final vote that would amend the UAA.

If approved, the new language would be inserted into the UAA, and state societies would be encouraged to ask their state legislatures in 2014 to amend laws in their states to reflect the new language.

The changes are seen as necessary by some because of the evolution of attest services, which in the UAA currently include audits of financial statements, reviews of financial statements, examination of prospective financial information, and any engagement performed under PCAOB standards.

Evolving marketplace and client needs have led to increased requests for CPAs and others to provide attestation on items such as sustainability reports, greenhouse gas emissions, controls on service organizations, and XBRL-tagged data. All of these services can currently be performed by non-CPAs using the AICPA’s professional standards. The scope and complexity of, and reliance by the public on, these types of services have caused profession thought leaders to ask whether non-CPAs have the proper qualifications to provide these services using AICPA standards and reporting language.

In addition, profession leaders point to SAS No. 70, Reporting on Controls at a Service Organization, which recently was rewritten and reissued as SSAE No. 16, as an impetus for action. Since examinations of prospective financial information are the only SSAEs currently covered under the definition of attest, this reclassification had the unintended effect of moving Reporting on Controls at a Service Organization out of covered services under the UAA’s definition of attest, allowing this type of reporting to be performed by non-CPAs.

Because public protection is paramount, the AICPA and NASBA are moving to include all examinations, reviews, and agreed-upon procedures under the SSAEs in the definition of attest.

CPAs must complete rigorous educational, examination, and experience requirements to be eligible to apply for and receive a CPA license. They must adhere to a code of conduct and comply with professional standards, and they face a high level of regulatory oversight. In addition, CPA firms operate under robust quality controls and processes, and are subject to peer review. Non-CPAs do not have to meet these requirements.

The AICPA is committed to working closely with members, member firms, state CPA societies, state boards of accountancy, and NASBA to resolve this risk, AICPA President and CEO Barry Melancon, CPA, CGMA, said in a statement.

“[The] vote by Council in support of reexamining the definition of attest affirms the profession’s commitment to protect the public interest by responding to important changes over the past decade,” Melancon said.

  An auditor of an SEC issuer’s financial statements is not precluded from performing an independent private-sector audit of that client’s conflict minerals report, according to nonauthoritative guidance ( prepared by an AICPA task force.

Seven new questions and answers the AICPA has issued on its Conflict Minerals Resources webpage ( provide nonauthoritative guidance on independence issues related to performing—or considering whether to accept an engagement to perform—an independent private-sector audit of a client’s conflict minerals report.

A flowchart ( that accompanies the Q&As depicts the process of considering what mix of conflict minerals-related services can be provided to an issuer client. A matrix ( also is provided to show illustrative services and whether the mix of services is permissible or prohibited from an independence perspective.

The Conflict Minerals Resources webpage includes background and other useful information about the use of conflict minerals, as well as an expanded “Useful Links” section.

  The PCAOB entered into a much-sought enforcement cooperation agreement with Chinese regulators.

A new memorandum of understanding creates a cooperative framework between the PCAOB and the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF).

The agreement does not allow for cross-border inspections, but it establishes a mechanism for producing and exchanging audit documents relevant to investigations in both countries’ jurisdictions.

Under the agreement, the PCAOB and the Chinese regulators will be able to request and receive from one another assistance in obtaining documents and information to aid them in their investigative duties.

The agreement is important because the PCAOB and the SEC have expressed frustration with their inability to review audit work performed for Chinese clients. Chinese law has been cited as a reason for audit firms’ refusal to share audit documents for Chinese clients with the PCAOB.

The new agreement is one step in that process, and the PCAOB is involved in continuing negotiations with the CSRC and MOF to permit joint inspections in China of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.


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