Exposure Drafts for Compilations and Reviews

The Accounting and Review Services Committee of the AICPA has published exposure drafts of three proposed Statements on Accounting and Review Services:

• Framework and Objectives for Performing and Reporting on Compilation and Review Engagements
• Compilation of Financial Statements
• Review of Financial Statements
  
  

Here are the significant proposed changes:

1. Practitioners will be able to express review assurance when independence has been impaired due to performing non-attest services designed to assist entities in preparing better financial statements (internal control services).
2. Accountants will have the option to disclose the reasons why they are not independent in performing compilation services.
3. Engagement letters will be required for both compilation and review services.
4. Terminology will change; limited assurance will change to moderate assurance, review risk will be added and defined and review evidence will be explained.
5. New documentation requirements for reviews will include managements’ responses to inquiries regarding analytical procedures fluctuations and other significant matters.
6. New compilation documentation requirements will include any fraud communications to management and significant findings or issues coming to the accountant’s attention, as well as questions about how they were resolved.
   
   

Exposure drafts of these proposed pronouncements can be downloaded from www.AICPA.org. by clicking on Professional Resources, Accounting and Auditing, Audit and Attest Standards and Exposure Drafts of Proposed Statements. Responses may be sent to mglynn@aicpa.org no later than July 31, 2009.