Attest function definition
/What is the Attest Function?
The attest function is the process of conducting an examination of an entity’s financial statements by a third party, where the outcome is the third party’s formal certification that the financial statements fairly present the entity’s financial results and financial position. The attest function is the primary role of the certified public accountant. Without the attest function, the investment community would have no way of verifying that the financial statements of the organizations in which they invest are accurate.
What Activities are Involved in the Attest Function?
The main activities involved in the attest function are as follows:
Planning the audit and conducting a risk assessment.
Gathering evidence through a variety of audit procedures.
Evaluating the evidence collected by the audit team, to see if it is sufficiently detailed to support the team’s opinion regarding the client’s financial statements. This can result in more evidence gathering.
Forming an opinion regarding the fairness of presentation of the client’s financial statements. This opinion is then documented in an audit report, which must accompany the client’s financial statements.
Issuing the audit report to the client’s audit committee, along with any commentary from the audit team regarding issues found.
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Functions on Which the Attest Function is Used
Here are key business activities to which the attest function can be applied:
Financial reporting. Includes the audits, reviews, or compilations of financial statements.
Compliance reporting. Includes attesting to compliance with industry-specific regulations, such as SOX (Sarbanes-Oxley Act) for public companies. It can also be used to verify compliance with tax laws and regulations.
Internal controls assurance. Includes the preparation of SOC 1, SOC 2, and SOC 3 reports.
Mergers and acquisitions. Includes the verification of financial information provided during due diligence.
Sustainability reporting. Includes attesting to the accuracy and completeness of sustainability or Environmental, Social, and Governance (ESG) reports.
Contractual obligations. Includes attesting to adherence to the terms of contracts or agreements, such as royalty agreements or franchise agreements.
Information systems. Used to verify IT systems security and operational controls (e.g., cybersecurity audits).
Supply chain compliance. Used to verify supplier compliance with contractual terms, ethical sourcing standards, or quality requirements.
Grant and funding compliance. Used to verify the proper use of grant funds or adherence to funding requirements for nonprofit organizations and government entities.
Prospective financial information. Used to provide assurance on forecasts, projections, or budgets presented to investors or stakeholders.
Litigation support. Used to attest to the accuracy of financial or operational data used in legal disputes.