Accounting and Review Services Committee Approves the Issuance of SSARS No. 21; To Be Issued 10/23/14
The AICPA Accounting and Review Services Committee will issue Statement on Standards for Accounting and Review Services (SSARS) No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification, on Oct. 23. SSARS No. 21 clarifies and revises the standards for reviews, compilations and engagements to prepare financial statements. It also includes significant revisions that affect the standards for accountants in public practice who prepare financial statements for their clients.
SSARS No. 21 eliminates the need for the accountant to determine when the accountant has prepared and presented financial statements by eliminating the submission requirement and making the compilation literature apply when the accountant is engaged to perform a compilation service. SSARS No. 21 also establishes requirements and guidance when an accountant in public practice is engaged to prepare financial statements but not engaged to perform an audit, review, or compilation of those financial statements.
SSARS No. 21 supersedes all existing AR sections in AICPA Professional Standards with the exception of AR section 120, Compilation of Pro Forma Financial Information. In 2015, AR section 120 is expected to be clarified and exposed for public comment along with new proposed requirements and guidance related to compilation of prospective financial information. The existing requirements and guidance related to compilation of prospective financial information is contained in Statements on Standards for Attestation Engagements.
Download the executive summary of SSARS No. 21.
Information from the Journal of Accountancy, "Clarified, revised SSARS approved for reviews, compilations, and engagements to prepare financial statements"
In October 2011, the Auditing Standards Board (ASB) reached a major milestone in its project to redraft all of the auditing sections in Codification of Statements on Auditing Standards (contained in Professional Standards), with the release of Statement on Auditing Standards Nos. 122-124. The clarified auditing standards are designed to make the standards easier to read, understand, and apply.
The Accounting and Review Services Committee (ARSC) has concluded that by undertaking a similar clarity project, the ARSC would serve the public interest by having all of the professional literature for audits, reviews, and compilations drafted using the same conventions. In addition, the resulting clarified compilation and review standards would be easier to read, understand, and apply.
In May 2010, the ARSC approved a project to revise all existing compilation and review standards in the Codification of Statements on Standards for Accounting and Review Services (AR sections of the AICPA’s Professional Standards) substantially using the drafting conventions adopted by the ASB in clarifying the auditing literature.
The ARSC has determined, however, that there would be certain differences between its clarity drafting conventions and those adopted by the ASB. Specifically, the ARSC has determined to not include specific application guidance with respect to governmental entities and smaller, less complex entities. Accordingly, the ARSC has commenced redrafting the Statements on Standards for Accounting and Review Services (SSARSs) in accordance with those conventions, which include the following:
- Establishing objectives for each clarified AR section
- Including a definitions section, where relevant, in each clarified AR section
- Separating requirements from application and other explanatory material
- Numbering application and other explanatory material paragraphs using an A- prefix and presenting them in a separate section that follows the requirements section
- Using formatting techniques, such as bulleted lists, to enhance readability
The ARSC expects to complete its project to clarify the SSARSs in 2015 with the exposure and subsequent issuance of a clarified standard addressing compilations of pro forma financial information and prospective financial information.
As the AICPA continues to work towards finalizing the Clarity Project, all current Exposure Drafts are always available in the AICPA.org Research Area.
Additional Resources and Guidance on the SSARSs Clarity Project
Understanding the SSARS 21Clarification and Revision
On October 23, be the first to hear about the most significant revisions to standards
for accountants in public practice who prepare financial statements
directly from the Chair of the AICPA Accounting and Review Services
Committee (ARSC) and the AICPA staff liaison to the ARSC, who will lead a
discussion on issues with respect to Statement on Standards for
Accounting and Review Services (SSARS) No. 21, Statements on Standards
for Accounting and Review Services: Clarification and Recodification
Archive of December 5 Compilation and Review Webcast Available
On December 5, the AICPA broadcast an interactive discussion with the Chair (Mike Brand) and Staff Liaison (Mike Glynn) of the AICPA’s Accounting and Review Services Committee, along with the Chair of the AICPA’s Technical Issues Committee (Karen Kerber) about recent developments in compilation and review standards and issues affecting 2013-2014 engagements. Based on the AICPA Compilation and Review Alert, the webcast included:
- Recent AICPA independence and ethics developments including changes to Ethics Interpretation #101-3
- Discussion of Financial Reporting Framework for Small and Medium-Sized Entities (FRF for SMEs™)
- The October 2013 exposure draft of the proposed clarified SSARSs: Association With Unaudited Financial Statements, Preparation of Financial Statements, and Compilation Engagements.
- The proposed clarified SSARS, Review of Financial Statements
- Current practice issues including engagement letter requirements
- Subsequent events, review evidence, analytical procedures in a review engagement
- Reporting on supplemental information in a compilation and review alert
- Applicability of the compilation standards when performing controllership or other management services
- Reporting when there is a different level of service from the prior period
- Common Peer Review findings
An archive of the webcast is available at https://university.learnlive.com/Demo.aspx?id=1066