The Auditing and Review Services Committee (ARSC) has issued Statement on Standards for Attestation Engagements (SSAE) No. 17, Reporting on Compiled Prospective Financial Statements When the Practitioner's Independence Is Impaired, to amend paragraph 23 of SASE No. 10 section 301, Financial Forecasts and Projections (AICPA, Professional Standards, vol. 1, AT sec. 301), to permit, but not require, the accountant to disclose the reason(s) for an independence impairment in a report on compiled prospective financial information.
You’ll recall that SSARS No. 19 permits, but does not require, the accountant to disclose the reasons he or she is not independent in a compilation report. The exposure draft for this SSAE was issued in April 2010 because the ARSC determined that the attestation standards should also be revised so that the practitioner, if he or she chooses, can disclose the reasons for independence impairment in the compilation report on compiled prospective financial information.
SSAE No. 17 is effective for compilations of prospective financial information for periods ending on or after December 15, 2010, with early implementation permitted.
You may obtain a hard copy of this SSAE from www.cpa2biz.com.
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Saturday, December 18, 2010
SSARS Exposure Draft
The Accounting and Review Services Committee (ARSC) has issued an Exposure Draft Proposed Statement On Standards For Accounting And Review Services, The Use of the Accountant’s Name in a Document or Communication Containing Unaudited Financial Statements That Have Not Been Compiled or Reviewed (Amends Statement on Standards for Accounting and Review Services No. 19, Compilation and Review Engagements [AICPA, Professional Standards, vol. 2, AR sec. 60 par. .51-.55]). You have until April 29, 2011 to comment on this proposed amendment.
The amendment would be effective for unaudited financial statements that have not been compiled or reviewed for periods ending on or after December 15, 2011.
The proposed SSARS would create new paragraphs in AR section 60, Framework for Performing and Reporting on Compilation and Review Engagements to cover the accountant’s responsibilities when he or she permits the use of his or her name in a document or written communication containing unaudited financial statements that have not been compiled or reviewed.
This proposed SSARS would establish:
The amendment would be effective for unaudited financial statements that have not been compiled or reviewed for periods ending on or after December 15, 2011.
The proposed SSARS would create new paragraphs in AR section 60, Framework for Performing and Reporting on Compilation and Review Engagements to cover the accountant’s responsibilities when he or she permits the use of his or her name in a document or written communication containing unaudited financial statements that have not been compiled or reviewed.
This proposed SSARS would establish:
- a requirement that prior to permitting the use of his or her name in a document or written communication containing unaudited financial statements that have not been compiled or reviewed the accountant should read the financial statements and other information in the document and consider whether such financial statements and other information appears free from obvious material misstatements and from material inconsistencies with other knowledge or information that the accountant may have obtained.
- a nonreporting option when the accountant permits the use of his or her name in a document or written communication containing unaudited financial statements that have not been compiled or reviewed provided that the accountant requests that the client clearly indicate that the unaudited financial statements were not compiled or reviewed by the accountant.
You may obtain a copy of the proposed SSARS from the AICPA website http://www.aicpa.org/.
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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Friday, December 10, 2010
ASB Issues SAS on Reports on Application of Requirements of an Applicable Financial Reporting Framework
The Auditing Standards Board has issued Statement on Auditing Standards, Reports on Application of Requirements of an Applicable Financial Reporting Framework. This SAS supersedes SAS No. 50, Reports on the Application of Accounting Principles (AICPA, Professional Standards, vol. 1, AU sec. 625). It is effective for engagements that end on or after December 15, 2012.
This SAS covers the reporting accountant’s responsibilities when asked to issue a written report on either the application of the requirements of an applicable financial reporting framework to a specific transaction or the type of report that may be issued on a specific entity’s financial statements. It also applies to oral advice provided by the reporting accountant that the reporting accountant concludes is intended to be used by a principal to the transaction as an important factor considered in reaching a decision on the application of the requirements of an applicable financial reporting framework to a specific transaction or on the type of report that may be issued on a specific entity’s financial statements.
Because there are differing interpretations that may exist concerning whether and, if so, how existing accounting policies in an applicable financial reporting framework apply to new transactions or how new accounting policies in an applicable financial reporting framework apply to existing transactions, management and others may consult with accountants on the application of the requirements of an applicable financial reporting framework to those transactions or to increase their knowledge of specific financial reporting issues.
You should be aware that this SAS does not apply to:
This SAS covers the reporting accountant’s responsibilities when asked to issue a written report on either the application of the requirements of an applicable financial reporting framework to a specific transaction or the type of report that may be issued on a specific entity’s financial statements. It also applies to oral advice provided by the reporting accountant that the reporting accountant concludes is intended to be used by a principal to the transaction as an important factor considered in reaching a decision on the application of the requirements of an applicable financial reporting framework to a specific transaction or on the type of report that may be issued on a specific entity’s financial statements.
Because there are differing interpretations that may exist concerning whether and, if so, how existing accounting policies in an applicable financial reporting framework apply to new transactions or how new accounting policies in an applicable financial reporting framework apply to existing transactions, management and others may consult with accountants on the application of the requirements of an applicable financial reporting framework to those transactions or to increase their knowledge of specific financial reporting issues.
You should be aware that this SAS does not apply to:
- a continuing accountant with respect to the specific entity whose financial statements the continuing accountant has been engaged to report on,
- engagements either to assist in litigation involving accounting or auditing matters or to provide expert testimony in connection with such litigation,
- professional advice provided to another accountant in public practice,
- to communications such as position papers prepared by an accountant for the purpose of presenting views on an issue involving the application of the requirements of an applicable financial reporting framework, provided that these communications are not intended to provide guidance on the application of these requirements to a specific transaction.
You may download clarified auditing standards from the AICPA website at www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources.
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Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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ASB Issues Clarified SAS on Analytical Procedures
The Auditing Standards Board has issued another clarified auditing statement, Analytical Procedures (Redrafted). This SAS supersedes SAS No. 56, Analytical Procedures (AICPA, Professional Standards, vol. 1, AU sec. 329) and is effective for audits of financial statements for periods ending on or after December 15, 2012.
This SAS covers the auditor’s use of analytical procedures as substantive procedures (substantive analytical procedures) and his or her responsibility to perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion on the financial statements. This clarified SAS refers to two other clarified SASs, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted) and Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (Redrafted). These two SASs contain information on the use of analytical procedures as risk assessment procedures and the nature, timing, and extent of audit procedures in response to assessed risks.
You’ll recall that clarified SASs contain “objectives.” These objectives have to do with the objectives of the auditor. In this clarified SAS those objectives are:
This SAS covers the auditor’s use of analytical procedures as substantive procedures (substantive analytical procedures) and his or her responsibility to perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion on the financial statements. This clarified SAS refers to two other clarified SASs, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted) and Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (Redrafted). These two SASs contain information on the use of analytical procedures as risk assessment procedures and the nature, timing, and extent of audit procedures in response to assessed risks.
You’ll recall that clarified SASs contain “objectives.” These objectives have to do with the objectives of the auditor. In this clarified SAS those objectives are:
- to obtain relevant and reliable audit evidence when using substantive analytical procedures and
- to design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion about whether the financial statements are consistent with the auditor’s understanding of the entity.
You may download clarified auditing standards from the AICPA website www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources.
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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Monday, December 6, 2010
Revision to SSARS No. 1
The Accounting and Review Services Committee (ARSC) has revised Interpretation No. 30 to SSARS No. 1 as amended. The revision provides guidance when the accountant reports on compiled or reviewed financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and the required comparative financial information is not provided.
The question asked in the interpretation, “May an accountant apply the reporting guidance in AR section 100 when engaged to report on financial statements presented in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB)?” The answer, “Yes,” basically because the IASB has been designated by the Council of the AICPA as the body to establish international financial reporting standards for both private and public entities pursuant to Rule 202.
You’ll find this interpretation particularly useful because it contains examples of emphasis of matter paragraphs, modification of the third paragraph of the standard report when compiling financial statements that omit substantially all disclosure but are otherwise in conformity with IFRS, and a review report when you have been engaged to review the historical financial statements in accordance with ISRE 2400.
This revised interpretation also answers a question concerning IFRS’s requirement to disclose comparative information in respect of the previous comparative period for all amounts presented in the current year’s financial statement. Failure to do so would be a departure from GAAP. The interpretation contains an example of a paragraph that may be added to the accountant’s compilation or review report that covers this issue.
The revised interpretation will be conformed for the issuance of SSARS No. 19, Compilation and Review Engagements.
The revised interpretation may be downloaded at
http://www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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The question asked in the interpretation, “May an accountant apply the reporting guidance in AR section 100 when engaged to report on financial statements presented in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB)?” The answer, “Yes,” basically because the IASB has been designated by the Council of the AICPA as the body to establish international financial reporting standards for both private and public entities pursuant to Rule 202.
You’ll find this interpretation particularly useful because it contains examples of emphasis of matter paragraphs, modification of the third paragraph of the standard report when compiling financial statements that omit substantially all disclosure but are otherwise in conformity with IFRS, and a review report when you have been engaged to review the historical financial statements in accordance with ISRE 2400.
This revised interpretation also answers a question concerning IFRS’s requirement to disclose comparative information in respect of the previous comparative period for all amounts presented in the current year’s financial statement. Failure to do so would be a departure from GAAP. The interpretation contains an example of a paragraph that may be added to the accountant’s compilation or review report that covers this issue.
The revised interpretation will be conformed for the issuance of SSARS No. 19, Compilation and Review Engagements.
The revised interpretation may be downloaded at
http://www.aicpa.org/InterestAreas/AccountingAndAuditing/Resources
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
Become a subscriber.
Subscribers have access to more detailed updates, Become a subscriber by going to http://www.cpafirmsupport.com/ and clicking on “Join Us.”
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