The Institute of Accountants in England and Wales (ICAEW) has updated its guidance on conducting assurance engagements on the internal controls of services organisations, following a public consultation last year.
Assurance reports on internal controls of service organisations made available to third parties, TECH 01/20 AAF replaces TECH 01/06 AAF and will come into effect for reporting periods beginning on or after 1 July 2020.
The ICAEW noted that organisations often outsource aspects of their business activities to third party ‘service organisations’ and that the guidance provided aims to enable service organisations to engage an independent practitioner to provide an assurance opinion on the controls in place over those outsourced activities.
The opinion can then be made available to user organisations and their external auditors, avoiding the need for several different user organisations to test the same controls.
Changes to the technical release include expanded guidance for the conducting the assurance engagement and senior management of service organisations.
ICAEW director of technical strategy accountability Nigel Sleigh-Johnson said: “The changes made to this key technical release will make it more accessible and are intended to enable a broader range of accountancy firms to conduct this type of assurance engagement. The feedback we’ve received from stakeholders throughout the consultation period has been invaluable and we are grateful to everyone who commented.”