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Exploring SSARS 21: A Look at
Preparation, Compilation and
Review Services
An Overview of the Changes and Impacts for
Our Clients and Our Practice
Instructions To Firms
Below are some suggestions when using this
PowerPoint to update your team members on SSARS
21.
• This PowerPoint is an overview of significant changes to
compilation and review engagements and an introduction to the
preparation service. It should be used to augment your
understanding of SSARS 21. Reviewing this is not a substitute
for reading and understanding the actual guidance.
• Several slides have a comment note for you to consider the
application based on your current practices (and consider
incorporating relevant examples), and there are likely others
throughout the PowerPoint
Once you have tailored this PowerPoint to your firm’s
current practices, delete this slide
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Objective
To provide an overview of changes resulting
from SSARS 21
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•
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Overview
Effective Dates
AR-C 70 - Preparation
AR-C 80 - Compilation
AR-C 90 - Review
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General Overview of
SSARS 21
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SSARS 21
Supersedes all existing AR sections except for AR
Section 120, Compilation of Pro Forma Financial
Information
•
Prospective financial information is currently codified in Attest Standards
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General Overview of SSARS 21
SSARS No. 21 is formatted into four separate
sections:
• Section 60, General Principles for Engagements Performed in
Accordance With Statements on Standards for Accounting and
Review Services
• Section 70, Preparation of Financial Statements
• Section 80, Compilation Engagements
• Section 90, Review of Financial Statements
These sections have been codified with the prefix
“AR- C” to denote them from the extant AR
sections.
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Effective Date
Effective for financial statement periods ending on
or after December 31, 2015
Early implementation is permitted
Interim engagements can be performed in
accordance with SSARS 21 or SSARS 19
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Section 60 – General
Principles
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Section 60 – General principles for SSARS
Engagements
Replaces AR Section 60, Framework for Performing
and Reporting on Compilation and Review
Engagements
Comply with the general principles in Section 60 in
addition to the relevant sections based on whether
the engagement is a preparation, compilation or
review
Not expected to result in changes to existing
practice
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Section 60 – General principles for SSARS
Engagements
AR-C Section 60 includes requirements with
guidance on:
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Ethical requirements
Professional judgment
Conduct of the engagement
Engagement level quality control
Acceptance and continuance of client relationships and
engagements
• Note to firms: Additional details about each of these
requirements is included in the speaker notes.
Firms may choose to add these details as additional
slides
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Section 70 – Financial
Statement Preparation
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Section 70 – Overview
New non-attest financial
statement preparation
service
Bright line between
accounting services
(preparation) and reporting
services (compilation or
review)
Financial statements may be
provided to third parties
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Section 70 – Overview
Applies when engaged to prepare financial
statements but not engaged to perform an audit,
review, or compilation on those financial
statements.
Does not apply when
• engaged to merely assist in preparing financial statements
• the financial statements are prepared as a by-product of another
engagement
The understanding with the client as to what the
engagement entails is important.
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Section 70 – Overview
Examples of when AR-C 70 may apply
• Preparation of financial statements prior to audit or review by
another accountant
• Preparation of financial statements to be presented alongside
the tax return
• Preparation of personal financial statements for presentation
alongside a financial plan
• Preparation of a single financial statement
• Using the information in a general ledger to prepare financial
statements outside of an accounting software system
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Section 70 – Overview
Examples of when AR-C 70 does not apply
• Preparation of financial statements when the accountant is
engaged to perform an audit, review, or compilation of such
financial statements
• Preparation of financial statements with a tax return solely for
submission to taxing authorities
• Personal financial statements that are prepared for inclusion
in written personal financial plans prepared by the accountant
• Financial statements prepared in conjunction with litigation
services that involve pending or
potential legal or regulatory proceedings
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Section 70 – Planning
An engagement letter signed by both the accountant
and management or those charged with governance
is required
• Note to Firms: Add reference to location of preparation
engagement letters for SSARS 21
No determination about independence is required
• The firm may want to maintain independence in case attest
services are requested in future
• Note to Firms: Add reference to location of independence
policies or person to whom questions should be directed
Identify clients who may be interested in engaging
us to perform preparation engagements.
• SSARS 8 engagements
• Accounting assistance
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Section 70 – Fieldwork
Obtain an understanding of the financial
reporting framework and significant
accounting policies
Discuss significant estimates and
judgments with clients
• Client needs to understand
• Client needs to accept responsibility
Prepare the statements using the records
and explanations provided by management
• Not required to verify the completeness or accuracy of
information
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Section 70 – Financial Statements
Financial statements can be prepared with or
without disclosures
• Disclose that substantially all disclosures are omitted
If using a special purpose framework include a
description
Financial statements can be prepared with a known
departure but must be disclosed
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Section 70 – Legend/Disclaimer
No report is required, even if the financial
statements are expected to be used by a third party
A legend is required on each page of the financial
statements indicating, at a minimum, “no assurance
is provided.” Examples:
• No assurance is provided on these financial statements.
• These financial statements have not been subjected to an audit,
review, or compilation engagement, and no assurance is
provided on them.
• Other statements that convey that no assurance is provided on
the financial statements are acceptable.
Note to firm: see speaker notes for additional considerations.
The legend can be shown as headers or footers.
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Section 70 – Legend/Disclaimer
The accountant or the accountant’s firm name is not
required to be included, although it can be.
• Note to Firms: Document firm policy if name will or will not
be included
Options if the legend is not included:
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Issue a disclaimer
Perform a compilation engagement; or
Resign.
Note to Firms: Document which option the firm will pursue
if a legend is not included
Keep a copy of the statements in the workfiles
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Peer Review Requirements
Note to firms: determine whether you wish to review
peer review requirements in your training session.
Firms that only perform preparation engagements
are not required to enroll in AICPA PRP
A firm’s preparation engagements are included in
the scope of a peer review when the firm either
elects to enroll in the program or is already enrolled
due to other engagements it performs
Changes are effective for peer reviews commencing
on or after February 1, 2015
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Section 80 – Compilation
Engagements
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Section 80 – Overview of Changes
Applies when the accountant is engaged to perform
a compilation engagement
Some changes to the engagement letter
A report is always required
Independence is a required consideration
Management use only financial statements (SSARS
8 engagements) are no longer an option.
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Section 80 – Planning
Requires an updated engagement letter
• Signature by both the accountant and the client is required.
• Note to Firms: Document location of engagement letters
updated for SSARS 21
One change to engagement letter is that
management’s responsibilities are clarified
• Clients may be concerned that management’s responsibilities
have changed, but they have not.
• Talking points available to help frame the conversation
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Section 80 – Fieldwork
No changes to procedures
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Section 80 – Financial Statements
Supplementary information references, such as
“See accountant’s compilation report” or “See
independent accountant’s compilation report.” are
allowed, but no longer required.
• Note to Firms: Document firm’s policy regarding if the
reference will be used and communicate in training
Statements can be prepared with or without
disclosures
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Section 80 – Reporting
A report is always required
Management use only financial statements (SSARS
8 engagements) are no longer an option.
• Preparation engagement under AR-C 70 is an option
• Or keep as compilation but with a report
• Note to firms: Document process for communicating with clients
currently receiving SSARS 8 financial statements and
discussing impact with them
Streamlined report
The city and state where the accountant practices is
now required
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Section 90 – Review
Engagements
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Section 90 – Overview of Changes
Some changes to the engagement letter
Some changes to the management representation
letter
Some changes to fieldwork requirements
Review report has been updated
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Section 90 – Planning
Updated engagement letter
• Signatures by both the accountant and the client are required.
• Management’s responsibilities are clarified.
• Language added regarding the form and content of the review
report expected to be issued.
• Statement added that management agrees to
- Include the review report in any document containing the
related financial statements
- Ask the accountant’s permission to do so
• Considerations with respect to using a special purpose
framework
• Note to Firms: Document location of engagement letters
updated for SSARS 21
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Section 90 - Fieldwork
Requirements regarding the performance of
analytical procedures have been clarified.
• Note to Firms: Add reference to updated policies for
performing analytical procedures in a review engagement
Inquiries are now presumptively required.
Reconciling the financial statements to underlying
accounting records is now specifically required.
Management representation letter guidance is
clarified.
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Section 90 – Financial Statements
Supplementary information references, such as
“See independent accountant’s review report.” is
allowed, but no longer required.
• Note to Firms: Document the firm’s policy for including
references to supplemental information
The concept of required supplementary information
is introduced
• Defined as information that an accounting standard requires to
accompany an entity’s basic financial statements
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Section 90 – Reporting
Updated report with heading and city and
state of accountant’s practice location
Modification to the standard report in certain
situations
Additional requirements for Emphasis of
Matter or Other Matter paragraphs
Expanded communications with management
or those charged with governance
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Financial Statement
Users
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Financial Statement Users
Start communicating with users
about the new report formats for
compilations and reviews.
• Provide examples of standard reports
Users may be concerned that they
are receiving something different.
• Reports have been modified but there is
no change to the level of service or
assurance previously provided.
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Next Steps
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Implementing The New Standards
We will begin implementing SSARS 21 during
the planning stage of year end
engagements.
• Start communicating management's
responsibilities and changes to compilation
and review reports during our planning
meetings
• Note to firms: Update these bullets with
specific instructions you wish to give to your
staff
Additional materials and documentation
provided by the AICPA at AICPA.org/SSARS21
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Reminders
Obtain signed updated engagement letters
Ensure you’re using the updated reports for
compilations and reviews
Ensure you’re using the updated management
letters for reviews
Talk to SSARS 8 engagements clients now to
determine level of engagement
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Questions?
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