An article in a recent issue of Technical Issues Alert says the increased emphasis on internal control systems for public companies has led to greater interest in engagements performed under SAS No. 70, Service Organizations, which involve audits of certain services and controls being provided by a service organization.

The AICPA reports that in some cases, SAS 70 audits are being performed and reported on by consulting organizations that may not be licensed CPA firms. In this situation, the individual or entity may be practicing accountancy illegally.

Practitioners should be alert to this possibility when they act as auditor for the user organization that receives the SAS 70 report. The AICPA recommends that CPAs consider calling a representative at an unfamiliar organization to verify that they are properly licensed and asking if they can provide their peer review report and letter of comments and response. If the organization is unlicensed, CPAs are advised to notify the state board of accountancy or state attorney general in the state where the engagement was performed or their own state board. CPAs may not rely on a report performed by an unlicensed individual or entity.

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