Major Changes to Accounting and Review Services Proposed

If you or your firm serves smaller entities then you will be very interested in the recently issued exposure draft from the AICPA Accounting and Review Services Committee (ARSC). The exposure draft contains three Proposed Statements on Standards for Accounting and Review Services. Issued April 28, 2009, the comment period ends July 31, 2009.

The proposed SSARSs contain significant proposed changes to SSARS.

Those of you who do primarily compilations will be particularly interested in the changes to issuing a report with respect to a compilation of financial statements for an entity when the accountant is not independent. The proposed SSARS, Compilation of Financial Statements, would permit the accountant to provide a general description regarding the reason that his or her independence is impaired and contains examples of general descriptions the accountant may use in his or her report.

The three proposed SSARS are:

1. Framework and Objectives for Performing and Reporting on Compilation and Review Engagement. Provides a framework and defines and describes the objectives and elements of compilation and review engagements.
2. Compilation of Financial Statements. Requires an engagement letter and contains enhanced documentation requirements, a discussion of internal control services, and allows the inclusion of a general description in the accountant’s compilation report regarding the reason(s) for an independence impairment.
3. Review of Financial Statements. Requires an engagement letter, provides expanded guidance on the performance of analytical procedures in a review engagement, and requires expanded documentation. It provides a discussion of internal control services and provides guidance to practitioners who are engaged to perform such services in addition to the review engagement and establishes the reporting requirements when the accountant’s independence is impaired due to the performance of internal control procedures.

Exposure drafts are available for download at www.aicpa.org.

How will this proposed SSARS affect your practice?
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