AICPA Proposes New Professional Standards for Forensic Accounting Engagements

Comments Due on Statement on Standards for Forensic Services No. 1 (SSFS 1) by Feb. 28

December 13, 2018

The American Institute of CPAs (AICPA) has proposed new CPA professional standards for members who perform forensic services engagements. The proposed "Statement on Standards for Forensic Services No. 1" (SSFS 1) are intended to provide more tailored authoritative guidance to members that perform forensic services, and protect the public interest. The standards are currently open for comment through Feb. 28, 2019.

Employment in forensic accounting grew at an annualized rate of 18% from 2012 to 2017 per a report from market research firm IBISWorld, and continued growth is projected in the coming years. With the increasing demand for forensic services, the development of a forensic standard is intended to improve consistency and quality.

The new proposed standards classify forensic engagements as services provided for "investigation" or "litigation" as follows:

• SSFS 1 identifies an investigation as services 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.
• Litigation is classified in SSFS 1 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.

Developed by the AICPA's Forensic and Valuation Services (FVS) Executive Committee, SSFS 1 also includes prohibitions on providing legal opinions and performing certain forensic services for a contingent fee. In addition, it provides more tailored authoritative guidance to AICPA members who perform forensic services.

SSFS 1 would apply to all AICPA members, AICPA member firms, and employees of AICPA member firms. All CPAs must follow the pertinent, laws, rules and standards when performing any engagement.

The proposal would take effect for new engagements accepted on or after May 1, 2019, with early adoption permitted. The AICPA has frequently asked questions about SSFS 1 online and is seeking comments from AICPA members and member firms, and other stakeholders through February 28, 2019.

The proposed standards are available for review on the AICPA's website. To submit a comment, email barbara.andrews@aicpa-cima.com.

Additional information and resources for CPAs engaged in forensic services is available from the AICPA's FVS Section.