InSight: SSARS19 - The New Compilation and Review Standard

In January 2010, the AICPA issued SSARS No. 19, “Compilation and Review Engagements,” which includes the most significant changes to the compilation and review standards in the last 30 years.  For the first time, the standards provide a broad framework for conducting compilations and reviews that places a premium on the exercise of practitioner judgment and the tailoring of engagement procedures to meet the needs of specific clients.  

The new standard also permits accountants to explain, in their compilation reports, the reasons why they are not independent. In general, SSARS 19 becomes effective for periods ending on or after December 15, 2010, but this provision relating to explaining the reasons for independence impairment in a compilation can be implemented immediately.

To understand how these changes might impact practice CPAs must be able to respond positively to questions such as:

• How well do I understand my client and their industry?
• On my review engagements do I possess an awareness of the areas in which there is a higher risk that the financial statements may be materially misstated?
• Will I be able to tailor my review procedures for each engagement?
• What other changes will SSARS 19 require me to make to the way I perform compilation and review engagements?

To help you answer those and other questions, the AICPA has produced an online, interactive, media-rich course. This course provides practical guidance and hands on practice in making sound judgments. Included in this course are video segments featuring Chuck Landes, Vice President, Professional Standards and Services at the AICPA, responding to frequently asked questions from practitioners about the new standards, what they mean, and how they can best be implemented.

Objectives

• Understand the process for obtaining limited assurance in a review engagement
• Apply materiality in the context of a review engagement
• Identify the required elements of an engagement letter for both a compilation and review engagement
• Identify the elements that should be documented in the workpapers when performing a compilation or review engagement
• Prepare a compilation report that describes the reason for an independence impairment, if applicable

Prerequisite:  Working knowledge of compilation and review engagements