New standards clarify expectations for investigative and litigation forensic accounting consulting services to improve quality and to protect the public interest.
NEW YORK (July 10, 2019) — The American Institute of CPAs (AICPA) released new professional standards for members who perform forensic services engagements.
The Statement on Standards for Forensic Services No. 1 (SSFS 1) provides authoritative guidance for members providing litigation and investigative services. Specifically, the standards clarify the definitions of litigation and investigation for accounting purposes, lays out key considerations for client and provider relationships, and establishes boundaries on the services members can provide.
“These new forensic standards are the first time we are codifying best practices for litigation and investigation consulting work,” said Annette Stalker, CPA, CFF, and chair of the AICPA’s Forensic and Valuation Services (FVS) Executive Committee. “Forensic accounting is a diverse practice, and this standard is unique because it is applied based on why a service is provided—litigation or investigation—rather than what skill set is employed.”
Under SSFS 1, forensic services provided for “investigation” or “litigation” are defined as follows:
- Investigation is a service performed in response to concerns of wrongdoing in which the member is engaged to perform procedures to collect, analyze, evaluate, or interpret certain evidential matter to assist the stakeholders (for example, client, board of directors, independent auditor, or regulator) in reaching a conclusion on the merits of the concerns.
- Litigation is an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties. The term litigation as used herein is not limited to formal litigation but is inclusive of disputes and all forms of alternative dispute resolution.
The standard, developed by the AICPA’s Forensic and Valuation Services (FVS) Executive Committee, also includes prohibitions on opining on the occurrence of fraud and performing certain forensic services for a contingent fee. In addition, it provides more tailored authoritative guidance to AICPA members who perform these forensic services.
SSFS 1 applies to all AICPA members, AICPA member firms, and employees of AICPA member firms.
The new standards take effect for new engagements accepted on or after January 1, 2020 with early adoption permitted.