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To: All Affiliated Credit Union CEOs

From: Matt Beard - Regulatory Specialist

Date: April 3, 2006

RE: AICPA Proposal Regarding Attestation Engagements

Note: This new Comment Call format is designed to highlight the key issues associated with the proposed changes, with the option of going to the full description from CUNA. If the topic discussed is of interest, you may click on the link that will take you to the full explanation and questions associated with the changes. If you receive this information via fax or mail, and you do not have Internet access, please contact Angie Hall at 800-262-6285 to receive CUNA’s full proposal


The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) has published an Exposure Draft containing a proposed Statement on Standards for Attestation Engagements (SSAE). The ASB is the senior technical committee of the AICPA designated to issue auditing, attestation, and quality control standards and guidance. It is authorized to make public statements on matters relating to auditing, attestation, and quality control standards without clearance from Council or the Board of Directors. This proposed SSAE would revise the requirements and guidance for an independent certified public accountant (CPA) for reporting on the internal control of nonpublic companies, including credit unions.

The proposed SSAE provides guidance to a CPA on evaluating management’s basis or substantiation for making an assertion about an entity’s internal control over financial reporting. Under the proposal, the CPA would be required to obtain a representation letter from the credit union management that includes a written assertion about the effectiveness of the entity's internal control. The proposal also details management’s documentation requirements to support the assertion.

According to the proposal, the CPA should evaluate identified control deficiencies by significant account balance, disclosure and component of internal control to determine whether the deficiencies, individually or in combination result in a significant deficiency or a material weakness. The proposal discusses the types of testing the CPA should perform in conducting the evaluation.

The proposed SSAE would require the CPA to communicate, in writing, to management and those charged with governance any significant deficiencies and material weaknesses that exist as of the date of management’s assertion, those the CPA becomes aware of during the examination, and any known or suspected fraud.

The Exposure Draft includes new appendixes, including one that provides an illustrative report that management must provide to external parties if the CPA’s report is to be for general use.

Comments are due to the AICPA by May 19, 2006. Please send your comments to MCUL by May 5, 2006.


  1. Do you feel that management’s responsibilities with respect to an examination as laid out in the proposal are reasonable? If not, which responsibilities are not reasonable and why?
  2. Do you think the criteria for management’s assertion are appropriate? If not, please explain why not?
  3. Are the documentation and monitoring requirements on management’s part proper? If not, what are your suggestions?
  4. Do the testing requirements make sense? If not, why not?
  5. Under this proposal, a credit union would have to have a CPA do the attestation. Further, one CPA may assist management in preparing or gathering documentation of a credit union’s internal control or recommending improvements to its internal control. However, another different CPA must perform the testing. This would require hiring one or more CPA firms. Does this seem overly burdensome? If yes, please quantify the additional burden imposed, if possible.

Potential Impact to Credit Unions. (Note: Below is a list of issues the MCUL identified as potentially impacting credit union policies, procedures, or operations. Keep in mind that as each credit union is unique, this list may not be exhaustive.)

  • This comment call ties in with Comment Call (06-07) Supervisory Committee Audits – Advance Notice of Proposed Rulemaking . Credit unions have the opportunity to provide input as to whether the s tandards for attestation engagements laid out in the proposal are reasonable, provided they will have to comply with the requirement in the future.
If you have any further questions, or to submit a response, please contact:

 Matt Beard
Michigan Credit Union League
112 East Allegan St., Suite 800
Lansing , MI 48933
Fax: (517) 482-3762

We Appreciate Your Response.

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