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This course provides a comprehensive review of the current standards and issues in compilation, review and accounting service engagements. The cases included provide examples from the whole spectrum of practice management and engagement performance. All CPAs managing a compilation, review or accounting service engagements will benefit.
Highlights include cases involving SSARSs pronouncements, interpretations and technical practice aids. Also included are examples of peer review deficiencies, fraud and independence issues, quality control and engagement administration, reporting and special engagement issues.
Objectives:Manage a compilation, review and accounting service practice in conformity with all applicable current professional standards
Prerequisite: Managing compilation, review and accounting service engagements
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Chapter 1 - Compilations and Reviews – Introduction and Background
Learning Objectives
• Be aware of the Accounting and Review Services Committee
• Understand the definitions contained in SSARS
• Recognize the relative authority of the guidance for compilations and reviews
• Be aware of the Statements on Standards for Accounting and Review Services and related interpretations
• Understand the purpose of AICPA Technical Practice Aids
Accounting and Review Services Committee
Compilation and review engagements are governed by Statements on Standards for Accounting and Review Services (SSARS), which are issued by the Accounting and Review Services Committee (ARSC). ARSC is a senior technical committee of the AICPA charged with developing
...procedures and standards of reporting by CPAs on the types of accounting and review services a CPA may render in connection with unaudited financial statements or other unaudited information of an entity that is not required to file financial statements with a regulatory agency in connection with the sale or trading of its securities in a public market. This charge shall not include any of the responsibilities of the Accounting Standards Executive Committee.
ARSC is an outgrowth of a subcommittee of the Auditing Standards Board (ASB) created in 1975 to reconsider existing pronouncements applicable to a CPA's association with unaudited financial statements of nonpublic companies.
The charge above specifically limits the scope of the ARSC's authority to unaudited financial statements and unaudited information of nonpublic entities. Statements on Auditing Standards (SAS) issued by the ASB continue to provide guidance to CPAs who perform services in connection with audited financial statements of nonpublic entities.
Definitions
Submission of Financial Statements
Presenting to a client or third parties financial statements that the accountant has prepared either manually or through the use of computer software.
Those Charged with Governance
The person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting process. In some cases, those charged with governance are responsible for approving the entity's financial statements (in other cases, management has this responsibility). In some entities, governance is a collective responsibility that may be carried out by a board of directors, a committee of the board of directors, a committee of management, partners, equivalent persons, or some combination thereof. Those charged with governance are specifically excluded from management, unless they perform management functions as defined below.
Management
The person(s) responsible for achieving the objectives of the entity and who have the authority to establish policies and make decisions by which those objectives are to be pursued. Management is responsible for the financial statements, including designing, implementing, and maintaining effective internal control over financial reporting.
Third Party
All persons, including those charged with governance, except for those members of management as defined above.
Issuer
An issuer is defined in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c], the securities of which are registered under section 12 of that Act (15 U.S.C. 78l), or that is required to file reports under section 15(d) [15 U.S.C. 78o(d)], or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933 (15 U.S.C. 77a et seq.), and that it has not withdrawn.
Nonissuer
All entities except for those defined as issuers.
Financial Statement
A presentation of financial data, including accompanying notes, derived from accounting records and intended to communicate an entity's economic resources or obligations at a point in time, or the changes therein for a period of time, in accordance with generally accepted accounting principles (GAAP) or an OCBOA. Reference in the SSARSs to GAAP include, where applicable, an OCBOA. Financial forecasts, projections and similar presentations, and financial presentations included in tax returns are not financial statements. Appropriate GAAP financial statement titles:
• Balance sheet
• Statement of income
• Statement of comprehensive income
• Statement of retained earnings
• Statement of cash flows
• Statement of changes in owners' equity
• Statement of assets and liabilities (with or without owners' equity accounts)
• Statement of operations
• Statement of revenue and expenses
• Statement of financial position (condition)
• Statement of activities
• Summary of operations
• Statement of operations by product lines
Appropriate OCBOA financial statement titles:
• Balance sheet – cash basis
• Statement of assets and liabilities arising from cash transactions
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Customer Service
Customer Service
Customer Service
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