United States

Third-party due diligence services: Asset-backed securitizations


The American Institute of Certified Public Accountants recently issued Statement of Position (SOP) 17-1, Performing Agreed-Upon Procedures Related to Rated Exchange Act Asset-Backed Securities Third-Party Due Diligence Services as Defined by SEC Release No. 34-72936. SEC Release No. 34-72936, Nationally Recognized Statistical Rating Organizations, acknowledges that certain procedures often performed by practitioners as agreed-upon procedures (AUP) engagements related to asset-backed securitizations are considered third-party due diligence services (as defined in the Release). These include due diligence services that relate to checking the accuracy of the information or data about the assets provided by the securitizer or originator of the assets. For example, comparing the information on a loan tape with the information contained on the hard-copy documents in a loan file is an activity that falls within the definition of due diligence services.

SOP 17-1 provides guidance to practitioners regarding the application of Statements on Standards for Attestation Engagements to AUP attestation engagements related to third-party due diligence services performed in connection with rated asset-backed securities issued in accordance with the Securities Exchange Act of 1934, as those services are defined in SEC Release No. 34-72936. The SOP addresses the following, among other matters:

  • Preconditions for engagement performance
  • Written assertion by the responsible party
  • Establishing an understanding with the engaging party
  • Subject matter and procedures to be performed
  • Reporting considerations

SOP 17-1 is effective for engagements that include covered services accepted subsequent to December 31, 2017. The SOP supersedes Attestation Interpretation No. 1, “Third-Party Due Diligence Services Related to Asset-Backed Securitizations: SEC Release No. 34-72936,” of AT-C section 215, Agreed-Upon Procedures Engagements.