New standard proposed for forensic services engagements

By Ken Tysiac

The AICPA Forensic and Valuation Services Executive Committee (FVSEC) has developed and issued for comment Monday a standard for engagements of forensic services.

The proposal would apply to all AICPA members and member firms, and would provide a two-pronged applicability test based on the purpose of the services being provided rather than the nature of the services.

Under the proposal, forensic services would be classified as services being provided for either "litigation" or "investigation." The proposal defines litigation as an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties. As defined in the standard, litigation does not need to be formal and includes alternative dispute resolution forums.

In an investigation, under the proposal, services are performed in response to concerns of wrongdoing in which the member is engaged to perform procedures to collect, analyze, evaluate, or interpret evidence to assist in reaching a conclusion on the merits of the concerns.

In addition, the proposed standard:

  • Includes prohibitions on providing legal opinions and performing certain forensic services for a contingent fee.
  • Provides more tailored authoritative guidance to AICPA members who perform forensic services.

The proposal would take effect for new engagements accepted on or after May 1, 2019, and early adoption would be permitted.

Comments on the proposal can be sent to Barbara Andrews, the AICPA's director for forensic services, at Barbara.Andrews@aicpa-cima.com by Feb. 28.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA's editorial director.

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