AICPA Issues SSFS 1, New Standards for Forensic Service Engagements
On July 11, 2019, the American Institute of CPAs (“AICPA”) released new standards for Forensic Service engagements, Statement on Standards for Forensic Services No. 1 (“SSFS”). The SSFS covers client engagements involving litigations and investigations. Prior to the issuance of these standards, litigation and investigation engagements were covered by the AICPA Statement on Standards for Consulting Services No. 1 (“SSCS”) and/or the Statement on Standards for Valuation Services No. 1 (“SSVS”).
It is noteworthy that when “an engagement meets the definition of forensic services, the SSCS does not apply.” However, the SSFS recognizes that there may be overlap with the SSVS if the engagement has both valuation and litigation/investigation elements. The SSFS notes that “the key consideration of this statement’s applicability is the purpose for which the member was engaged as opposed to the skill set employed or services provided.”
Further, the SSFS brings clarity to and/or confirms other topics including:
- When engaged as an expert witness, the member cannot work under the Agreed Upon Procedures Standard.
- When engaged as an expert witness, contingent fee arrangements are prohibited unless explicitly allowed under the Contingent Fees Rule (ET sec 1.510.001).
- The trier of fact, not the member, is the ultimate decider of fraud. Based on an objective assessment, the member can opine whether the evidence is consistent with fraud schemes or laws.
The SSFS is effective for new engagements accepted on or after January 1, 2020, and early adoption is allowed.