The AICPA has developed a set of questions and answers to help explain the changes resulting from the recent issuance of Statement on Standards for Attestation Engagements No. 16, Reporting on Controls at a Service Organization, by the AICPA’s Auditing Standards Board.
SSAE No. 16 is applicable when an entity outsources a business task or function to another entity (usually one that specializes in that work) and the data resulting from that task or function is incorporated in the outsourcer’s financial statements.
In SSAE No. 16, an entity that performs a specialized task or function for other entities is known as a service organization and an entity that outsources the task or function to a service organization is known as a user entity.
Prior to the issuance of SSAE No. 16, the guidance for service auditors reporting on controls at a service organization was contained in Statement on Auditing Standards No. 70, Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 324), as amended.
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