New Accounting Rules Regarding AUPs Taking Effect May 1, 2017: More Fun For A Battered Industry

The Auditing Standards Board (the "ASB") of the American Institute of Certified Public Accountants recently released new standards as part of the "Attestation Clarity Project" with the goal of redrafting all its standards "in clarity format" (what format were they in before? And, while we're at it, can we try to use English here? Clarity format?). This Project will require compliance by bankers and issuers with very specific disclosure obligations (reps?) before the auditors will issue an Agreed Upon Procedures Letter (AUPs) for securitizations. Some of this formalized existing practice, but the changes go further and are far more prescriptive. A "new letter of representation" from the party who hires the auditors (the "Engaging Party") is required as well as similar letters from the parties providing the data that the auditors are reviewing (each, a "Responsible Party"). These new rules will become effective on May 1, 2017. Any AUP that is issued after May 1 will be