EXPOSURE DRAFT

Proposed Statements on Standards for Accounting and Review Services: Proposed SSARS, Framework and Objectives for Performing and Reporting on Compilation and Review Engagements; Proposed SSARS, Compilation of Financial Statements; and Proposed SSARS, Review of Financial Statements

Explanatory Summary

The AICPA’s Accounting and Review Services Committee (ARSC) has issued exposure drafts of a proposed Statements on Standards for Accounting and Review Services (SSARS), Framework and Objectives for Performing and Reporting on Compilation and Review Engagements; Compilation of Financial Statements; and Review of Financial Statements.

The proposed statements will recodify AR section 100, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2), into separate chapters for compilation and review engagements. In addition, the requirements and guidance in AR section 20, Defining Professional Requirements in Statements on Standards for Accounting and Review Services and AR section 50, Standards for Accounting and Review Services (AICPA, Professional Standards, vol. 2), have been included in the proposed SSARS, Framework and Objectives for Performing and Reporting on Compilation and Review Engagements. If, after consideration of the comments received on the exposure drafts, the proposed SSARSs are approved for issuance as final SSARSs, extant AR sections 20, 50, and 100 will be superseded.

The proposed significant changes to SSARSs are as follows:

1. The proposed SSARS, Framework and Objectives for Performing and Reporting on Compilation and Review Engagements introduces the new terms review evidence and review risk to the review literature.
   
   
2. The proposed SSARS, Framework and Objectives for Performing and Reporting on Compilation and Review Engagements includes a discussion of materiality in the context of a review engagement.
   
   
3. The proposed SSARSs, Compilation of Financial Statements and Review of Financial Statements require that an accountant establish an understanding with management regarding the services to be performed for each engagement through a written communication (that is, an engagement letter).
   
   
4. The proposed SSARSs, Compilation of Financial Statements and Review of Financial Statements establish enhanced documentation requirements for compilation and review engagements, respectively.
   
   
5. The proposed SSARSs, Compilation of Financial Statements and Review of Financial Statements provide a discussion of internal control services and provide guidance to practitioners who are engaged to perform such services in addition to the compilation or review engagement.
   
   
6. The proposed SSARS, Compilation of Financial Statements allows an accountant to include a general description in the accountant’s compilation report regarding the reason(s) for an independence impairment.
   
   
7. The proposed SSARS, Review of Financial Statements provides expanded guidance with respect to the performance of analytical procedures.
   
   
8. The proposed SSARS, Review of Financial Statements revises the reporting requirements for a review engagement including establishing the reporting requirements when the accountant’s independence is impaired during the performance of internal control procedures.
   

If approved for issuance as final SSARSs, the proposed statements would be effective for compilations and reviews of financial statements for periods beginning on or after December 15, 2010. Early application would be permitted.

Comments should be sent via electronic mail to Mike Glynn at mglynn@aicpa.org and received no later than July 31, 2009. To facilitate the ARSC’s consideration of responses, comments should refer to specific paragraphs and include supporting reasons for each suggestion or comment. Comments will become part of the public record of the AICPA and will be available for public inspection at the offices of the AICPA after August 31, 2009, for one year.

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Download the Exposure Draft