By Allison M. Henry, PICPA, Vice President – Professional & Technical Standards
In October 2014, the AICPA Accounting and Review Services Committee finalized SSARS No. 21, Statement on Standards for Accounting and Review Services: Clarification and Recodification, which supersedes all of the SSARS through No. 20 -- with the exception of SSARS No. 14, Compilation of Proforma Financial Information, which is currently being clarified. SSARS No. 21 is effective for engagements on financial statements for periods ending on or after Dec. 15, 2015, and brings about a number of significant changes, including a new preparation standard and a revised definition of compilation. As the AICPA Accounting and Review Services Committee has introduced some new concepts into the SSARS, practitioners have been asking many questions:
- Do I have to enroll in AICPA’s peer review program?
- If I am engaged to prepare a tax return and I issue financial statements as a by-product of the tax return engagement, am I required to prepare the financial statements under the new SSARS preparation standard?
- If I have a bookkeeping client and I print the statements for the client, am I required to comply with the new preparation standard?
- If I prepare and issue a compilation report on a set of financial statements, have I performed a preparation engagement, a compilation engagement, or both?
- Can I still perform an SSARS No. 8, Management Use Only, compilation engagement?
- If no report is issued, how do you disclose the lack of assurance on a nondisclosure compilation?
Other questions practitioners should be considering include the following:
- What steps should be taken if the client won’t allow a no-assurance legend to be included on each page of the financial statements that I am engaged to prepare?
- Do I have to be independent on a preparation engagement?
- Do I have to obtain an engagement letter for a compilation engagement?
- What are some potential pitfalls of the preparation standard?
- What impact does the new standard have on my firm’s quality control document?
- Do I have to update my multiyear engagement letters?
- Does the accountant’s name have to be included on the legend for a preparation engagement?
- Can I implement SSARS No. 21 early? If so, do I have to implement early for all SSARS engagements?
- Does the new preparation standard apply when the accountant is engaged to perform an audit, review, or compilation engagement?
To address these detailed questions, the PICPA Accounting and Auditing Procedures Committee hosted a roundtable discussion. Additional resources are available that address some of these questions, including a column in the Pennsylvania CPA Journal, a PICPA On-Demand CPE session with Michael Glynn, a comprehensive SSARS No. 21 AICPA webpage, and a column in the Journal of Accountancy. Have additional questions? PICPA’s A&A is interested in hearing from you. Please reach out to me at (215) 972-9187, or firstname.lastname@example.org. For more information, visit www.picpa.org/ssars21.