Definition
Criteria are the benchmarks the practitioner uses to measure or evaluate subject matter. AT-C 105 describes suitable criteria as having four characteristics: relevance, objectivity, measurability and completeness. Criteria must also be available to intended users, either through the report, the assertion or publicly. Criteria can be established by regulators or recognized bodies, such as the trust services criteria, or developed by management.
Why it matters in an audit or review
If criteria are not suitable, the practitioner cannot accept an examination or review. Management-developed criteria can be used, but they must be disclosed so users understand what the opinion means, and they must meet the suitability characteristics. Sustainability engagements are where this issue comes up most often, because disclosed methodologies vary.
Example
Illustrative: a company wants assurance on a metric called customer satisfaction, defined only as "positive feedback." The practitioner asks for a documented definition covering the survey population, scale and timing. Without it, the criteria are not measurable and the engagement cannot proceed.
Common mistakes
- Accepting management's criteria without checking all four characteristics.
- Failing to describe the criteria in the report.
Sources
- AICPA, AT-C Section 105, Concepts Common to All Attestation Engagements, requirements and application material on suitable criteria
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