Module A
Other Public Accounting Services
ACCT 4080
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1. Assurance Services
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Risk assessment
Business performance measurement
Information systems reliability
Electronic commerce
Third party reimbursement maximization
XBRL reporting
Customer satisfaction surveys
ACCT 4080
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2. Compilation and Review
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Performed by an “accountant”
Levels of assurance
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Audit
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Review
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limited assurance (moderate) (negative)
Compilation
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positive assurance (reasonable assurance)
no assurance (Disclaimer of Opinion)
Applicable standards
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SSARSs (AR)
SSARS No. 19 – 2010
SSARS No. 21 – new clarified standards will be effective in 2015
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ACCT 4080
engaged to compile f/s
engaged to prepare f/s
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2. Compilation & Review
(continued)
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Compilation of financial statements
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ACCT 4080
A service, the objective of which is to assist management in
presenting financial information in the form of financial
statements, information that is the representation of
management without undertaking to obtain any assurance
that there are no material modifications that should be made
to the financial statements in order for the statements to be
in conformity with the applicable financial reporting
framework.
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2. Compilation & Review
(continued)
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To compile financial statements, the accountant
should possess knowledge of the following:
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ACCT 4080
general understanding of the nature of entity's industry
and its business transactions
form of its accounting records
stated qualifications of its accounting personnel
applicable financial reporting framework
form and content of the financial statements
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2. Compilation & Review
(continued)
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Compilation procedures required
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obtain engagement letter
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understand entity‘s industry and business
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read f/s looking for obvious accounting principle or accuracy errors
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however, no responsibility to conduct audit procedures to gather any
evidence about accuracy or completeness of f/s or to evaluate internal
control
Okay if not independent
Okay if financial statements omit disclosures
ACCT 4080
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Accountant’s Compilation Report
We have compiled the accompanying balance sheet of Sample Company as of December 31, 2011,
and the related statements of income, retained earnings, and cash flows for the year then ended. We
have not audited or reviewed the accompanying financial statements and, accordingly, do not express
an opinion or provide any assurance about whether the financial statements are in accordance with
U.S. generally accepted accounting principles.
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the U.S. and for designing, implementing,
and maintaining internal control relevant to the preparation and fair presentation of the financial
statements.
Our responsibility is to conduct the compilation in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified Public Accountants. The
objective of a compilation is to assist management in presenting financial information in the form of
financial statements without undertaking to obtain or provide any assurance that there are no material
modifications that should be made to the financial statements.
ACCT 4080
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2. Compilation & Review
(continued)
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Review of financial statements
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ACCT 4080
A service, the objective of which is to obtain
limited assurance that there are no material
modifications that should be made to the financial
statements in order for the statements to be in
conformity with the applicable financial reporting
framework.
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2. Compilation & Review
(continued)
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To review financial statements, the accountant should
possess knowledge of the following
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ACCT 4080
same as for a compilation, and
general understanding of the entity's organization, its operating
characteristics, and the nature of its assets, liabilities, revenues,
and expenses
also, general knowledge of the entity's production, distribution,
and compensation methods, types of products and services,
operating locations, and material transactions with related
parties
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2. Compilation & Review
(continued)
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Review procedures required
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written engagement letter
understanding of the client’s industry and business (but no evaluation of
internal control)
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analytical procedures
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inquiry of management
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written management representations
Accountant must be independent
Financial statements must contain all disclosures
ACCT 4080
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Accountant’s Review Report
We have reviewed the accompanying balance sheet of Sample Company as of December 31, 2011, and the
related statements of income, retained earnings, and cash flows for the year then ended. A review includes
primarily applying analytical procedures to management's financial data and making inquiries of company
management. A review is substantially less in scope than an audit, the objective of which is the expression of
an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America and for designing, implementing,
and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public Accountants. The standards require us to
perform procedures to obtain limited assurance that there are no material modifications that should be made to
the financial statements. We believe that the results of our procedures provide a reasonable basis for our
report.
Based on our review, we are not aware of any material modifications that should be made to the financial
statements in order for them to be in conformity with accounting principles generally accepted in the United
States of America.
ACCT 4080
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3. Review of Interim Fin Stmts
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Review of interim financial statements
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Required for issuers by the SEC
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Auditor can only perform review if
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ACCT 4080
Reviews of interim statements follow the SASs
(AU-C § 930), not SSARSs
have audited latest financial statements
or are in process of auditing latest fin stmts
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4. Attestation Engagements
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Definition of attest engagement
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Report on the subject matter, or an assertion about the
subject matter, that is the responsibility of another party
Performed by a “practitioner”
Types of services
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ACCT 4080
examinations
reviews
agreed-upon procedures
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4. Attestation Engagements
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Levels of assurance
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examination
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review
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limited (moderate) level of assurance
not allowed on certain engagements
agreed upon procedures
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similar to an audit
high level of assurance (reasonable assurance)
assurance depends on procedures performed
Applicable standards
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ACCT 4080
SSAEs (AT)
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4. Attestation Engagements
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Types of attestation subject matter
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ACCT 4080
Agreed Upon Procedures Engagements (AT 201)
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scope less than audit
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report – no opinion or negative assurance (list procedures and findings)
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limited use report
Financial Forecasts and Projections (AT 301)
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definitions
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limited use reports (except some forecasts can be general use report)
Reporting on Pro Forma Financial Information (AT 401)
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definitions
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limited use reports
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4. Attestation Engagements
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Types of attestation subject matter
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Reporting on an Entity’s Internal Control over Financial Reporting (AT 501)
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no reviews
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mostly same as PCAOB standards
Compliance Attestation (AT 601)
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no reviews
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Management’s Discussion and Analysis (AT 701)
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Service Organizations (AT 801)
ACCT 4080
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Type 1 report
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Type 2 report
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5. Special Reports
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Follow SASs (auditing standards)
Special Purpose Framework Statements (SPF), AU-C 800
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Specific elements, accounts, or items in a financial statement, AU-C 805
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previously called OCBOA statements
regulatory basis
tax basis
cash basis
modified cash basis
no piecemeal reports
Reporting on application of accounting principles (opinion shopping),
AU-C 915
ACCT 4080
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6. Future Services
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XBRL
ACCT 4080
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Review Questions for Discussion
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A.3
A.5
A.6
A.7
A.9
A.13
A.12
ACCT 4080
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