Page 113 - Bankruptcy Volume 1

 preparing or reviewing valuations of the debtor’s business, often done as part of the formulation
for the plan of reorganization, sale under Section 363, or solvency determinations;

 analyzing the profitability of the debtor’s business, often done as part of the formulation of a
plan as well as cash flow projections;

 preparing or reviewing monthly operating reports required by the bankruptcy court, a required
reporting in all Chapter 11 matters;

 reviewing financial transactions of the debtor for possible preference payments and fraudulent
conveyances;

 preparing or reviewing the financial projections of the debtor, often done as part of the prepara-
tion of cash flow budgets while under court supervision, as well as the evaluation of the basis for
conversion to Chapter 7; and

 providing assistance in developing or reviewing plans of reorganization or disclosure statements.
fn 3

For services to be exempt from the requirements of the SSAEs, they must be rendered in connection
with litigation, and the parties to the proceeding must have an opportunity to analyze and challenge the
work of the accountant. If the practitioner expresses a written conclusion about the reliability of a writ-
ten assertion by another party, and the conclusions and assertions are for the use of others who, under
the rules of the proceedings, cannot analyze and challenge the work, the SSAEs or SSARSs would ap-
ply. If the practitioner is specifically engaged to perform a service in accordance with the SSAEs or
SSARSs, those professional standards are also applicable.

Comparing Attest and Litigation Consulting Services

Many accountants unfamiliar with the bankruptcy process may unnecessarily associate themselves with
financial statements and analyses to which attestation, audit, or review standards do not apply.

In order for the accountant to determine whether services rendered during bankruptcy consulting en-
gagements are subject to these standards, he or she must remember that for the litigation services ex-
emption to apply, the service must be performed in connection with the litigation-bankruptcy, and all
parties to the proceeding must have an opportunity to analyze and challenge the accountant’s work. The
accountant must also understand the intended use of his or her work product and identify any and all
parties who may rely on the work product.

In many bankruptcy engagements, certain services performed by accountants are not subject to attesta-
tion standards, but others are. For example, special reports on preference or insolvency analysis are not
subject to attestation standards — the work is performed in connection with the bankruptcy, and the
findings within the report are able to be analyzed and challenged by other parties to the proceeding.
Even if the determination is made that a report is not subject to the attestation standards, however, an ac-

fn 3 The words review and reviewing are not intended to have the same meaning as they do in the Statements on Standards for Ac-
counting and Review Services (SSARSs).

© 2020 Association of International Certified Professional Accountants 111