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Review of Proposed Association and Compilation SSARSs with 2012/2013 ARSC November 13-15, 2012

Review of Proposed Association and Compilation SSARSs with 2012/2013 ARSC November 13-15, 2012. Compilations and Nonattest Services . ARSC reliability project started in 2009 to make internal control and financial statement preparation work easier for practitioners

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Review of Proposed Association and Compilation SSARSs with 2012/2013 ARSC November 13-15, 2012

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  1. Review of Proposed Association and Compilation SSARSs with 2012/2013 ARSCNovember 13-15, 2012

  2. Compilations and Nonattest Services • ARSC reliability project started in 2009 to make internal control and financial statement preparation work easier for practitioners • PEEC voted to amend 101-3 to withdraw a requirement that impairs independence if a CPA designs or maintains internal controls for an attest client • With this barrier and confusion removed, PEEC exposed for public comment proposed new standards to clarify that preparation of financial statements, in whole or in part, is a non attest service • Comments are due on November 30, 2012

  3. Attest versus Non Attest Services • Today’s compilation standard applies when the CPA is engaged to perform a compilation or where the practitioner submits financial statements to their client. • Submission means prepare and present • Because PEEC will define preparation as a non attest service, compilation, review and auditing standards all need to be revised to state that preparation or drafting is not part of the attest service, but rather a non attest service.

  4. Compilation and Nonattest Services • With PEEC’s proposed change, ARSC proposed to remove submission from the applicability section since preparation would no longer be part of the compilation (attest) service. Essentially no other changes being made • This amendment would take nothing away from the CPA to do what they do today for a client today. It would merely clarify for them when they needed to follow the compilation standard.

  5. Compilation and Non Attest Service • CPAs who prepare financial statements but are not engaged to perform a compilation (or review or audit) engagement, would be required to request of management that the financial statements contain a legend or notation that makes clear that the financial statements were not audited, reviewed, or compiled. • The CPA could always attach a disclaimer or compilation report to the financial statements.

  6. Proposed Effective Date • The proposed Compilation SSARSs would be effective for compilations of financial statements for periods ending on or after December 15, 2014. Early implementation is required if the accountant early implements the revised 101-3; otherwise, early implementation is not permitted.

  7. Where are the issues? • Many members incorrectly believe that attest engagement is the same as an assurance engagement, so many members don’t understand why a compilation is an attest service today • Attest engagement. An attest engagement is an engagement that requires independence as defined in AICPA Professional Standards. • Many members (and clients) believe that compile and prepare are the same thing. So they don’t understand the nuance between attest and non attest • Some members have expressed concern regarding the public interest when the CPA prepares financial statements but has not reported

  8. ARSC Thought Process • Can’t compel a member to perform an attest engagement when they’ve been hired to perform a non attest service • Practice issues around submission are very prevalent today due to cloud application and other electronic platforms • No one knows any longer when submission occurs so member is placed at risk for following a standard when it isn’t clear when the standard applies • Public interest is served by having clarity around applicability and not confusing users regarding CPA association

  9. Questions?

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