SSARS No. 21

Statement on Standards for Accounting and Review Services (SSARS)

The Accounting Review Services Committee (ARSC) has come together in an effort to clear up the standards for reviews, compilations, and engagements to prepare financial statements that are currently in Statement on Standards for Accounting and Review Services (SSARS) No. 19. SSARS No. 21 is effective for periods ending on or after December 15, 2015 but can be implemented immediately. This standard includes revisions that will affect us directly as we serve in the public practice to prepare financial statements for you. SSARS No. 21 consists of four sections which take the place of all the existing AR sections except for one, AR section 120, Compilation of Pro Forma Financial Statements.

Section 60

Section 60 includes the General Principles for Engagements Performed in Accordance With SSARS. This section is meant to replace what we currently know as AR section 60, Framework for Performing and Reporting on Compilation and Review Engagements. This section defines accountants’ professional responsibilities while preparing, compiling, or reviewing financial statements and also provides guidance on the following items:

Ethics

• Professional judgment
• Conduct of the engagement in accordance with SSARS
• Engagement level quality control
• Acceptance and continuance of client relationships and engagements

Section 70

This section addresses a new service in which we are preparing financial statements but not performing an audit, review, or compilation. An accountants’ report is not required to be included with these statements, even if they are being prepared for third party use. Since  a report is not presented, we must include a statement on each page of the statements that no assurance is being provided .

Section 80

Compilation engagements fall under this section and the standards provided by the ARSC have not changed very much. The big difference is that we now have to prepare a report for each and every compilation. In the past this was not required for compilations that were prepared for management-use only.  The previous “management-use only” statements have been replaced by the guidance provided related to the “preparation of financial statements” which is covered by Section 70 (above). This section also notes certain circumstances that require  additional paragraphs to be included in the compilation report Section 90

This section is for the review of financial statements and again has very few changes from SSARS No. 19. However, there are a few very simple adjustments that were made and they start with us having to include headings in our review reports as well as our city and state. Another minor change in SSARS No. 21 is that we need to include an emphasis-of-matter or other-matter paragraph in reports that relate to certain situations which are listed on the AICPA website with further detail.

In the end, the revisions made by ARSC for the new standards in SSARS No. 21 will help us provide you and the third party users of the financial statements with relevant  financial information. By December 15^th of this year the standards will be in full effect and no longer an option. We will have no problem adapting to them and providing you with the service that is most relevant and useful for your financial reporting needs.

 http://www.aicpa.org/Research/Standards/CompilationReview/DownloadableDocuments/SSARS_21_Summary.pdf