In times of uncertainty it is often the case that accountants and auditors receive an increase in the number of requests to sign, certify, confirm or opine on a broad range of issues. Examples often include requests that the auditor confirms that a business is in compliance with legislation/regulations or that a business will continue into the foreseeable future etc.
Members are advised in these times, to consider very carefully any requests that they receive from clients and third parties that require them to opine on matters that are outside of the scope of the usual statutory audit report or compilation reports (prepared in accordance with M14).
In considering such requests members are advised to consider the following;
- Who is requesting the information and for what reason?
- Can an opinion be reached on the matter that is being requested?
- What is the level of work that is required to reach an opinion or otherwise?
- Is the request asking the accountant/auditor to form an opinion on matters into the future?
In their responses to such requests members are advised to;
- Consider the extent of the work required and set out and agree the scope of the work to be completed with the client, if it is envisaged that the request is appropriate.
- Issue an engagement letter setting out the responsibilities of all parties and the scope of the work required.
- Ensure all work and tests completed and conclusions reached are fully documented and dated.
- Ensure that an engagement file is prepared to support the opinion provided.
When developing reports members are advised;
- State and refer to the facts of the case – e.g. Firm X act as Accountants to X client. The work undertaken to support the opinion was as follows;
- Agreed a sample of invoices for X service to the accounting records of the X.
- Negative assurances may be more appropriate in formulating a conclusion, i.e. nothing has come to our attention….
- Avoid opining on matters into the future – e.g. we certify/confirm that X client will continue to operate into the future or we confirm that X client has sufficient financial funds to continue to operate into the future.
- Avoid opining on matters which are outside the skillset and knowledge base of the accountant e.g. opining on compliance with COVID 19 regulations and work restrictions.
- Reports should ideally be addressed to the directors of a company and should not be prepared for a broad audience, e.g. avoid “To whom it may concern”.
- The addition of a disclaimer may be appropriate.
- Support all work with appropriate written representations from management.
For further advice and guidance Members should refer to
Miscellaneous Technical Statement 39, Reporting to Third Parties.
If you have queries on such matters please contact the CPA Technical Enquiry Service at
techqueries@cpaireland.ie