AICPA Issues Compilation and Review Standard

The AICPA’s Accounting and Review Services Committee (ARSC) has proposed the most significant changes to the professional literature for compilation and review engagements since the December 1978 issuance of SSARS no. 1, Compilation and Review of Financial Statements.

The proposed Statements on Standards for Accounting and Review Services (SSARSs), issued in April for public comment, were developed to address concerns shared by smaller business owners, users of small business financial statements and CPAs that serve smaller entities and to provide more flexibility in a complex practice environment.

The primary change in the proposed standards for review engagements relates to allowing practitioners to perform review engagements when independence has been impaired due to the performance of a non-attest service designed to help management prepare higher quality or more reliable financial statements. The primary change in the proposed standards for compilation engagements is the ability for the accountant to disclose a general description of the reasons for a lack of independence in the compilation report.

The proposed SSARSs are:

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

To read the exposure draft, go to tinyurl.com/d4wkx2. Comment letters are available at tinyurl.com/qtahgm.