The attestation standards provide guidance to the auditor when providing varying levels of assurance on a written assertion made by a client or a third party. Similar to traditional audits of historical financial statements and historical financial data, the CPA can provide either positive or limited assurance on the written assertion and can also perform agreed-upon procedures. The assertion can be financial or nonfinancial in nature. Additionally, the auditor's report can be for either general or restricted distribution.
The assertion must be capable of reasonably consistent estimation or measurement and be based upon criteria established by a recognized body or stated in a sufficiently clear and comprehensive manner for a knowledgeable reader to understand them. To conduct an attestation service, the CPA must be independent, exercise due professional care, have training and proficiency in the attest function, and be knowledgeable in the attest subject matter.
Table I contains an extensive list of financial and nonfinancial attestation services that have been provided by practitioners. The examples of attestation services include those that are primarily financial in nature, such as attesting to contract costs and current values of real estate. Additionally, the examples include those that are primarily nonfinancial in nature. such as attesting to product claim validity and statistical survey results.
Areas of Practice
To obtain an understanding of the impact of attestation standards on public accounting practice, 971 CPAs were selected at random from members of the AICPA who indicated they practice public accounting. Data concerning the nature and scope of services were accumulated by individual offices. Firms with multiple offices could therefore be represented more than once in the responses. A response rate of 15% was achieved.
CPAs were asked to estimate the percentage of their office's professional time to be devoted to traditional and nontraditional services in the year 2000. These prospective data will permit CPAs in various sized firms to react to their colleagues' marketing strategies.
Table 2 contains a profile of profesS sional services expected to be provided in the year 2000 categorized by firm size. Small firms (10 or fewer professional staff constituted 73% of the respondents. The small firms expect that nearly three quarters of their practice will be devoted to individual tax, compilation and bookkeeping, corporate tax, personal financial planning, and other services. The mediumsized firms (11 to 100 professional staff), who comprise 12% of the respondents, expect just over half of their practice to be comprised of these services. The large firms (over 100 professional staff) provided 15% of the responses and anticipate that just over a quarter of their practice will be devoted to these areas. Management consulting will comprise 26% of large firms' practice, 10% of medium firms, and eight percent of the small firms. Attestation, audit, and review services will comprise 45% of large firms' practice, 38% of medium frms', and 17% of the small firms' practice.
It appears the large firms, who have always led other firms in traditional audit work, will incorporate nontraditional attestation services in their practice. In fact, large firms expect 23% of their attest services to be nontraditional. Medium firms also believe attestation services will be a substantial revenue generator as they expect 18% of all attest work to be nontraditional. Small firms anticipate that only 13% of their attestation work will be nontraditional. Large firms will be leaders in the nontraditional attest area. This is not surprising, since large firms were first to pursue this practice area as they could easily build upon existing audit competencies to expand a similar service area.
Even though nontraditional attestation services are expected to be a significant portion of the total attest services area, they are expected to constitute a relatively small share of a firm's total service portfolio. …