SSAE No. 18

While our focus is often on financial statement preparations, compilations, reviews and audits, especially during busy season, accountants are often asked to provide comfort on an assertion of management, such as compliance with the terms of a loan agreement or the effectiveness of internal controls, for example, at a 3rd party service provider. These engagements, called attestations, are covered by the AICPA’s Statement of Standards on Attestation Engagements (SSAEs). And recent changes to the SSAEs may have a big impact on how accountants perform these engagements.

As part of its recodification project, the AICPA has been rewriting all of its professional standards, with SSAE No. 18, Attestation Standards, Clarification and Recodification, being its effort to update its attestation standards.  Issued in April 2016 and effective for reports issued on or after May 1, 2017, SSAE No. 18, which applies to examination, review and agreed-upon-procedure reports that are covered by the SSAES, incorporates may of the same drafting techniques that we have seen in other AICPA recodification offerings, making them much easier to read and apply.  Additionally, the recodified standard is more consistent with the international attestation standard on these types of engagements.  The net effect is that the attestation standards will look a lot different under SSAE No. 18 and will also have some different requirements and reports for accountants who perform engagements under them.

The key to an attestation engagement is that a party makes an assertion about whether the subject matter is measured or evaluated in accordance with suitable criteria. The accountant’s job is to provide comfort on this assertion, in the form of an opinion, conclusions or findings, based on the level of services provided.  These levels of service are examinations, reviews and agreed-upon-procedures. SSAE No. 18 organizes the standards for such engagements into three broad categories, Common Concepts (Section 100), Level of Service (Section 200) and Subject Matter (Section 300). While the “how-to” hasn’t changed too much under SSAE No. 18, there are some changes with regard to the need to obtain a written assertion as well as the need for a written representation letter, in most instances. Also, the formats of reports issued under SSAE No. 18 changed from existing standards.

In addition to these changes, the updates in SSAE No. 18 support the movement of standards on certain engagements of prospective financial information to the accounting and review standards, in SSARS No. 23, Omnibus Statement on Standards for Accounting and Review Services – 2016. Combined, these new standards mean big changes in the attestation world and require accountants to stay on top of what the changes in in both of these mean when performing these engagements.

With the effective date of both SSAE No. 18 and SSARS No. 23 just around the corner, now is the time to get up to speed on attestation engagements and  the changes brought about by these new standards. Attend Surgent’s current course on navigating SSARS No. 21-23, and stay tuned for an updated course covering SSAE No. 18.

Rich Daisley is Director, Accounting and Financial Reporting Content for Surgent Professional Education. With over 26 years of experience in the accounting and auditing field, Mr. Daisley has worked in both the client service setting, mainly for PwC’s Capital Markets and Accounting Advisory Services Group and for PECO Energy’s Merger and Acquisition Group, and in the internal capacity setting as a course developer and facilitator creating leading training courses for PwC and Surgent. Rich lives in suburban Philadelphia.