Familiarize Yourself with CPA Professional Standards
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The American Institute of Certified Public Accountants (AICPA) provides oversight for most of the accounting profession. Part of the AICPA’s mission is to develop and enforce a range of standards for the accounting profession.
Having some familiarity with AICPA standards provides business owners and managers with the ability to best take advantage of the services CPAs have to offer.
The AICPA provides a code of professional conduct that gives CPAs ethical guidance. The standards contain additional guidance on the following topics:
Audit and attest. CPAs must adhere to these standards when conducting, planning, and reporting audit and attestation engagements. These engagements include compilations, reviews, and agreed upon procedures of nonpublic companies. Preparation, compilation, and review. These rules apply to engagements for nonpublic companies specifically.
Tax. Tax guidance applies no matter where the CPA practices or the types of tax services the CPA provides.
Personal financial planning. These standards cover services including, estate, retirement, investments, risk management, insurance, and tax planning for individuals.
Consulting services. These rules apply to CPAs providing consulting services concerning technology or industry-specific expertise, in addition to management and financial skills.
Valuation services. There are a variety of reasons for business valuations to be performed, including tax and accounting compliance, litigation, and mergers and acquisitions.
New Forensic Accounting Standards
The demand for forensic accounting services has grown significantly in recent years. In turn, the AICPA has added a standard for forensic services. These new rules provide guidance on investigations and litigation engagements that involve forensic accountants. The new policy will go into effect on January 1, 2020.
It is important that you are aware that the Statement on Standards for Forensic Services No.1 places many limitations of forensic accountants, including prohibitions on charging contingent fees and providing legal opinions, or the “ultimate conclusion” regarding fraud. Legal opinions are now up to the trier-of-fact (generally a jury or judge) to determine innocence or guilt in fraud allegations. CPAs are still able to express opinions regarding whether the evidence is “consistent with certain elements of fraud” and other laws according to their objective evaluation.
There are multiple professional standards that a CPA is required to follow for any given assignment. In addition to assignment-specific standards, CPAs must comply with general standards of the accounting profession such as competence, due professional care, and the use of sufficient, relevant data. These extensive rules and restrictions are good news for business owners and managers, as they ensure the highest standards of quality and consistency when receiving CPA services.
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