Definition
In attestation standards, the responsible party is the party responsible for the subject matter. In an assertion-based examination, the responsible party makes a written assertion about the subject matter. The responsible party may or may not be the engaging party. In a SOC 2, management of the service organization is the responsible party and provides the assertion about the description and the effectiveness of controls.
Why it matters in an audit or review
Without an identified responsible party who accepts responsibility, there is no attestation engagement. The practitioner obtains written representations from the responsible party, and if the responsible party refuses to provide them, the practitioner considers the effect on the report and may disclaim an opinion or withdraw.
Example
Illustrative: a trade association engages a practitioner to report on a member's compliance with membership requirements. The member is the responsible party, and the association is the engaging party. The practitioner obtains the member's written assertion and representations, not the association's.
Common mistakes
- Assuming the party paying for the engagement is always the responsible party.
- Preparing management's assertion for it, which impairs independence and the objectivity of the report.
Sources
- AICPA, AT-C Section 105, Concepts Common to All Attestation Engagements
- AICPA, AT-C Section 205, Assertion-Based Examination Engagements
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error