Special Reports & Accounting
& Review Services
Key Points for this Course:
Refresh Attest Function
Non-Audit Levels of F.S. Engagements
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Most Common F.S.
Engagements
 Audits
(Examinations) (Attest)
 Reviews (Attest)
 Compilations (Attest, but not assurance
because independence required unless
impairment disclosed in report)
Slide 19-2
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Professional Standards
Reviews and Compilations
Reviews of Interim F.S. - Public Company
 AU 722 (SAS 100) (Must reference PCAOB standards which
incorporates this AIPCA Section.)
Reviews of Interim F.S. – Company with Audited F.S.
 AU 722 (AU-C 930)
Reviews & Compilations of F.S.
 Statements on Standards for Accounting &
Review Services (SSARS)
(AR Section of AICPA’s Professional Standards)
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Professional Standards
Reviews and Compilations
AU 722 (AU-C 930)

If latest annual F.S. were audited and

Engaged to audit current annual F.S. or
Expect to audit current annual F.S. and
audited last year and

Client uses same financial reporting
framework for both the interim and annual
F.S.
(Also applies to most condensed F.S.)
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Reviews - Minimum Procedures
Establish & document through a written communication
with Mgmt, an understanding with mgmt regarding
services to be performed. (engagement letter)
Gain understanding of the client’s industry.
Gain knowledge of the client.
Read F.S. for obvious errors or omissions.
Assess risks of material misstatements.
Perform analytical procedures & ask about significant
variances.
Slide 19-5
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Reviews - Minimum Procedures (con’t)
Inquire of members of mgmt who have responsibility for
financial & accounting matters. (next 2 slides)
Inquire concerning actions taken at meetings of stockholders,
the board of directors, committees of the board of directors
that may affect F.S.
Obtain reports from other accountants engaged to audit or
review the financial statements of significant components of
the reporting entity, its subsidiaries, and other investees.
Follow up on CPA Observations/Concerns.
Obtain management representation letter (class web site)
Assess Going Concern risks, seek mgmt conclusions &
adequacy of F.S. reporting or disclosure for GAAP compliance.
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Reviews - Client Inquiries
•
Whether the financial statements have been prepared in
conformity with the applicable financial reporting framework
•
The entity's accounting principles and practices and the
methods followed in applying them and the entity’s
procedures for recording, classifying, and summarizing
transactions and accumulating information for disclosure in
the financial statements
•
Unusual or complex situations that may have an effect on the
financial statements
•
Significant transactions occurring or recognized near the end
of the reporting period
•
The status of uncorrected misstatements identified during the
previous engagement
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Reviews - Client Inquiries (con’t)
•
Questions that have arisen in the course of applying the
review procedures
•
Events subsequent to the date of the financial statements that
could have a material effect on the financial statements
•
Their knowledge of any fraud or suspected fraud affecting the
entity involving management or others where the fraud could
have a material effect on the financial statements (for
example, communications received from employees, former
employees, or others)
•
Significant journal entries and other adjustments
•
Communications from regulatory agencies
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Review Report – 1st Paragraph
We have reviewed the accompanying balance sheet of
XYZ Company as of December 31, 20XX, 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 (owners’) financial data and making
inquiries of company management (owners). 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, I (we) do not express such an opinion.
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Review Report – 2nd Paragraph
Management (owners) is (are) 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.
Slide 19-10
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Review Report - 3rd Paragraph
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. Those standards require me (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.
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Review Report – 4th Paragraph
Based on our review, we are not aware of any
material modifications that should be made to
the accompanying financial statements in order
for them to be in conformity with accounting
principles generally accepted in the United
States of America.
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Compilations - Minimum Procedures
Establish & document through a written communication
with Mgmt, an understanding with mgmt regarding services
to be performed. (engagement letter)
Gain understanding of the client’s industry.
Gain knowledge of the client.
Read F.S. for obvious errors or omissions.
Request & consider mgmt’s response & corrections to CPA
observations.
Assess Going Concern risks, seek mgmt conclusions &
adequacy of F.S. reporting or disclosure for GAAP
compliance.
Slide 19-13
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Compilation Report - 1st Paragraph
We have compiled the accompanying balance sheet
of XYZ Company as of December 31, 20XX, 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
accounting principles generally accepted in the
United States of America.
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Compilation Report - 2nd Paragraph
Management (owners) is (are) 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.
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Compilation Report – 3rd Paragraph
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.
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Compilation Report – Other Paragraphs
Management has elected to omit substantially all of
the disclosures required by accounting principles
generally accepted in the United States of America. If
the omitted disclosures were included in the financial
statements, they might influence the user’s
conclusions about the company’s financial position,
results of operations, and cash flows. Accordingly,
the financial statements are not designed for those
who are not informed about such matters.
We are not independent with respect to XYZ
Company. (Reason may be disclosed.)
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Compilation Report – Clarity Project
Management is responsible for the accompanying financial statements of
XYZ Company, which comprise the balance sheets as of December 31,
20X2 and 20X1 and the related statements of income, changes in
stockholders’ equity, and cash flows for the years then ended, and the
related notes to the financial statements in accordance with accounting
principles generally accepted in the United States of America. I (We) have
performed compilation engagements in accordance with Statements on
Standards for Accounting and Review Services promulgated by the
Accounting and Review Services Committee of the AICPA. I (We) did not
audit or review the financial statements nor was (were) I (we) required to
perform any procedures to verify the accuracy or completeness of the
information provided by management. Accordingly, I (we) do not express
an opinion, a conclusion, nor provide any form of assurance on these
financial statements.
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