AICPA Issues Exposure Draft of New Standard for Forensic Accounting Services by Richard A. Pollack, CPA/ABV/CFF, ASA, CBA, CFE, CAMS, CIRA, CVA

Posted on March 25, 2019 by Richard Pollack

Forensic accounting services can play a pivotal role in cases involving financial fraud, breach of contract, hidden assets, lost profits and economic damages. As demand for these services continue to increase, the American Institute of CPAs (AICPA) has proposed a new professional standard for CPAs who perform forensic services. The exposure draft aims to “protect the public interest” and improve the delivery of forensic services, which legal counsel should rely on when evaluating a practitioner’s credentials.

The AICPA’s Statement on Standards for Forensic Services No. 1 (SSFS No. 1) applies specifically to services forensic accountants provide as part of either investigative or litigation engagements. The exposure draft defines investigative engagements as those in which forensic accountants apply their skills to collect, analyze, evaluate or interpret evidential matter in response to concerns about a wrongdoing. Litigation engagements are defined as those that involves actual or potential legal or regulatory proceeding before a trier-of-fact, regulatory body or alternative dispute resolution forum for which a forensic accountant may serve as an expert, consultant, neutral, mediator or arbitrator.

Any services a forensic accountant provides that is beyond the scope of an actual investigation or litigation engagement would not be bound by the SSFS No. 1. As an example, the new standard would not apply to a forensic accountant who is retained to collect data for a matter that is neither a litigation nor an investigation engagement.

In addition to requiring that forensic accountants retained for investigation and litigation engagements exercise professional competence, due care, honesty and objectivity, the proposed standard also references the need for forensic accountants to obtain “sufficient and relevant data to afford a reasonable basis for conclusions and recommendations.” While SSFS No. 1 allows forensic professionals to provide expert opinions relating to their objective evaluation of evidence and whether or not such evidence is consistent with certain elements of fraud, it prohibits forensic accountants from providing opinions as to the ultimate conclusion of fraud or legal determinations. That responsibility is reserved solely for judges or other triers-of-facts.

Finally, the standard prohibits forensic professionals and their firms from performing certain services on a contingent fee basis or entering into engagements in which there is a conflict of interest that may impair the forensic accountant’s judgement and objectivity. Attorneys who engage forensic accountants should stay up-to-date on any additional changes to the exposure draft and the additional final adoption of SSFS 1, which is scheduled to go into effect on May 1, 2019.

About the Author: Richard A. Pollack, CPA/ABV/CFF, ASA, CBA, CFE, CAMS, CIRA, CVA, is director-in-charge of the Forensic and Litigation Support practice with Berkowitz Pollack Brant, where he has served as a litigation consultant, expert witness, court-appointed expert, forensic accountant and forensic investigator on a number of high-profile cases. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at


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