For more than three decades, the AICPA Accounting and Review Services Committee (ARSC) has developed technical guidance for review and compilation engagements with the overarching objectives of serving the public interest and providing practitioners with the guidance needed to perform and report effectively. ARSC has developed the authoritative literature within the Statements on Standards for Accounting and Review Services (SSARS) on a foundation of tenets associated with the need to be independent to perform assurance engagements, such as reviews, along with the need to modify reports in circumstances where independence has been impaired when performing non-assurance engagements, such as compilations.

However, issues that have emerged among financial statement users, preparers, assurers, regulators and other stakeholder groups suggest that client-based independence rules are, in some cases, an obstacle to helping clients provide reliable financial reports. This article, written by members of the AICPA’s Reliability Task Force, describes the work of the task force, the evolving refocus on reliability, and prospective changes in compilation and review standards.

The task force has concluded that barring accountants from expressing some level of assurance if they play a role in the client’s internal control is impractical for many smaller entities. Some entities cannot prepare reliable financial statements without their CPA playing a role in certain control activities. Therefore, the task force believes that the public interest would be served by allowing CPAs to perform select nonattest services, such as certain internal control activities, while also performing a review of those financial statements.

This article has been excerpted from the Journal of Accountancy. Read the full article here.