.34 Question—Section 101, Attest Engagements, paragraph .04, provides an example of a litigation service provided by practitioners that would not be considered an attest engagement as defined by section 101. When does section 101 not apply to litigation service engagements?

.35 Interpretation—Section 101 does not apply to litigation services that involve pending or potential formal legal or regulatory proceedings before a "trier of fact"¹ in connection with the resolution of a dispute between two or more parties in any of the following circumstances when the:

a.  Practitioner has not been engaged to issue and does not issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about the subject matter that is the responsibility of another party.

b.  Service comprises being an expert witness.

c.  Service comprises being a trier of fact or acting on behalf of one.

d.  Practitioner's work under the rules of the proceedings is subject to detailed analysis and challenge by each party to the dispute.

e.  Practitioner is engaged by an attorney to do work that will be protected by the attorney's work product privilege and such work is not intended to be used for other purposes.

When performing such litigation services, the practitioner should comply with Rule 201, General Standards, of the AICPA Code of Professional Conduct.

 .36 Question—When does section 101 apply to litigation service engagements?

.37 Interpretation—Section 101 applies to litigation service engagements only when the practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about the subject matter, that is the responsibility of another party.

 .38 Question—Section 101.04c provides the following example of litigation service engagements that are not considered attest engagements:

Services performed in accordance with the Statement on Standards for Consulting Services, such as…. engagements in which a practitioner is engaged to testify as an expert witness in accounting, auditing, taxation, or other matters, given certain stipulated facts.

What does the term "stipulated facts" as used in section 101.04c mean?

.39 Interpretation—The term "stipulated facts" as used in section 101.04c means facts or assumptions that are specified by one or more parties to a dispute to serve as the basis for the development of an expert opinion. It is not used in its typical legal sense of facts agreed to by all parties involved in a dispute.

.40 Question—Does Attest Engagements Interpretation No. 2, Responding to Requests for Reports on Matters Relating to Solvency (paragraphs .23 through .33), prohibit a practitioner from providing expert testimony, as described in section 101.04c before a "trier of fact" on matters relating to solvency?

.41 Interpretation—No. Matters relating to solvency mentioned in paragraph .25 are subject to legal interpretation under, and varying legal definition in, the Federal Bankruptcy Code and various state fraudulent conveyance and transfer statutes. Because these matters are not clearly defined in an accounting sense, and therefore subject to varying interpretations, they do not provide the practitioner with the suitable criteria required to evaluate the assertion. Thus, Attest Engagements Interpretation No. 2, Responding to Requests for Reports on Matters Relating to Solvency (paragraphs .23 through .33), prohibits a practitioner from providing any form of assurance in reporting upon examination, review or agreed-upon procedures engagements about matters relating to solvency (as defined in paragraph .25).

.42

However, a practitioner who is involved with pending or potential formal legal or regulatory proceedings before a "trier of fact" in connection with the resolution of a dispute between two or more parties may provide an expert opinion or consulting advice about matters relating to solvency. The prohibition in paragraphs .23 through .33 does not apply in such engagements because as part of the legal or regulatory proceedings, each party to the dispute has the opportunity to analyze and challenge the legal definition and interpretation of the matters relating to solvency and the criteria the practitioner uses to evaluate matters related to solvency. Such services are not intended to be used by others who do not have the opportunity to analyze and challenge such definitions and interpretations.

[Issue Date: July, 1990; Revised: January, 2001.]