In October 2011 the Auditing Standards Board (ASB) released Statements on Auditing Standards No.’s 122-124. Making the auditing standards easier to read, understand, and apply was the main focus of the ASB. The Accounting and Review Services Committee (ARSC) concluded that a similar clarity project for Statements on Standards for Accounting and Review Services (SSARS) would benefit the public interest and in May 2010 approved such a project. Further, this project would align all professional literature on audits, reviews and compilations. SSARS 21, which clarifies and recodifies SSARS, is the result of the aforementioned clarity project. All outstanding SSARS – except for SSARS 14, which is being redrafted and will be reissued – are superseded by SSARS 21. Engagements for periods ending on or after December 15, 2015 performed in accordance with SSARS must follow SSARS 21, with early implementation permitted.
Review engagements are largely unchanged, with the standards being rewritten mostly for clarification and understandability. The format of the review report has been modified to more closely resemble the format of audit reports.
Compilation engagements are largely unchanged as well. The format of the compilation report have also been modified to more closely resemble the format of audit reports. The main change to note is that a compilation report is now required for all compilation engagements. Any compilation engagement in the past which would have qualified for the non-reporting exception would now be considered a preparation engagement.
Preparation services are a new type of engagement we can offer to our clients. Preparation engagements are non-attest services and do not require MWB to determine whether we are independent of the client. MWB is not required to verify the accuracy or completeness of the information provided by management or otherwise gather evidence to express any opinion or conclusion on the financial statements. In fact, MWB will either ensure that a statement is included on the face of the financial statements that indicates that “no assurance is provided” on the financial statements or issue a disclaimer that states the same. This disclaimer is to clearly represent to users of the financial statements MWB’s involvement, or lack thereof, with the financial statements. Prepared financial statements are made at management’s discretion and MWB’s name is not included anywhere within the statements.
This new level of service is intended to address situations where accountants are working closely with clients throughout the year on their records and at the end of the year accumulate those records in financial statements with no report needed. Further, it is a recognition that with today’s technology accountants can prepare financial statements for a client without the need to formally present them with a bound copy, which was commonplace for compilations in the past. SSARS 21 provides a distinct separation between accounting services (preparations) and reporting services (compilations or reviews). If you have any questions regarding possible preparation engagements or the different service options available from MWB please contact firstname.lastname@example.org.