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AICPA Issues New Professional Standards for Forensic Accountants

Earlier this month, the American Institute of CPAs (AICPA) issued new professional standards for AICPA members that perform forensic accounting services.

The Statement on Standards for Forensic Services No. 1 (SSFS 1) offers authoritative guidance for members providing litigation and investigative services. These standards explain the definitions of litigation and investigation for accounting purposes, lay out key considerations for client and provider relationships, and set boundaries on the services members can provide.

Annette Stalker, CPA, CFF, and chair of the AICPA’s Forensic and Valuation Services (FVS) Executive Committee said: “These new forensic standards are the first time we are codifying best practices for litigation and investigation consulting work.  She added, “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 these new standards, 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.

SSFS 1 also includes prohibitions on opining on the occurrence of fraud and performing certain forensic services for a contingent fee.

The standards apply to all AICPA members, AICPA member firms, and employees of AICPA member firms. They take effect for new engagements accepted on or after January 1, 2020 with early adoption permitted.

Although these standards have just been issued formally by the AICPA, they have always been the principles of Certified Public Accountants, and MDD has been adhering to these practices for many years.

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