SSARS No. 21-23 Update Part 2 – Compilation and Review Standards

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SSARS No. 21-23 Update Part 2 ? Compilation and Review Standards

7 Hours

PDH Academy

PO Box 449 Pewaukee, WI 53072 pdhacademy@

888-564-9098

SSARS Nos. 21-23: Statements on Standards for Accounting and Review Services: Clarification and Recodification

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The purpose of this course is to inform the reader of the various changes made to the compilation and review codification by SSARS No. 21. The course addresses two of the three types of engagements that can be performed under the SSARSs including: a compilation engagement and a review engagement. The third engagement, Preparation of Financial statements course, can be found in PDH Academy's course titled SSARS 21 Update Part 1, which can be purchased separately.

After reading the Sections I and II course material, you will be able to:

? Identify some of the changes in SSARS No. 21 that are and are not carried over from auditing standards

? Identify engagement types that are and are not authorized under SSARS No. 21

After reading the Section III course material, you will be able to:

? Recall the objective of a compilation engagement under AR-C 80 of SSARS No. 21 ? Identify some of the safeguards that must be in place in order for an accountant to

perform a nonattest service for an attest client ? Identify some procedures that must be performed in a compilation engagement under

AR-C 80 of SSARS No. 21 ? Recognize some of the changes made to the new compilation report under SSARS No.

21 including those related to special purpose frameworks and GAAP departures, among others ? Recognize some of the documentation requirements in a compilation engagement ? Identify how an accountant should report on a disclaimer of supplementary information in a compilation engagement

After reading the Section IV course material, you will be able to:

? Recognize the type of information on which an accountant may or may not perform a review engagement under AR-C 90 of SSARS No. 21

? Identify requirements to be satisfied to perform a review engagement under AR-C 90 ? Identify the date as of which management representations should be made in a

management representation letter for a review engagement ? Recognize an appropriate title that can be used for a review report under SSARS No.

21 ? Identify the order in which certain report paragraphs should be placed in the review

report ? Recall the items that should be documented in a review engagement

After reading the Section V course material, you will be able to:

SSARS Nos. 21-23: Statements on Standards for Accounting and Review Services: Clarification and Recodification

3 ? Recognize the effective dates of SSARS No. 21 including early implementation options

Field of study: Level of knowledge: Prerequisite: Advanced preparation: Recommended CPE hours: Course qualification:

CPE sponsor information:

Auditing

Overview

General understanding of U.S. GAAP

None

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Qualifies for both NASB QAS and Registry CPE credit based on a 50-minute per CPE hour measurement

NASBA Registry Sponsor Number:138298

SSARS Nos. 21-23: Statements on Standards for Accounting and Review Services: Clarification and Recodification

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SSARS Nos 21- 23 Update Part 2 ? Compilation and Review Standards

Table of Contents

I. Overview of the New Standards ..................................................................................................6 A. Issued .....................................................................................................................................6 B. Effective Date.........................................................................................................................6 C. Objective ................................................................................................................................6 D. Background ............................................................................................................................6

II. AR-C Section 60- General Principles for Engagements Performed in Accordance with Statements on Standards for Accounting and Review Services .....................................................16

A. Introduction ..........................................................................................................................16 B. Key Changes Made in New AR-C 60 ..................................................................................16 C. Definitions ............................................................................................................................17 D. Requirements for Performing SSARS Engagements...........................................................20 Review Questions and Suggested Solutions ..............................................................................32 III. AR-C Section 80- Compilation Engagements ........................................................................37 A. Introduction ..........................................................................................................................37 B. Effective Date.......................................................................................................................40 C. Scope of AR-C 80- Compilation Engagements ...................................................................40 D. Objective of a Compilation Engagement .............................................................................44 E. Definitions ............................................................................................................................44 F. Requirements- Compilation Engagements- AR-C 80 ..........................................................44 G. Engagement Letter- Compilation.........................................................................................49 H. Performing a Preparation Engagement at Interim- Independence Issues ............................70 I. The Accountant's Knowledge and Understanding of the Entity's Financial Reporting Framework- Compilation Engagement......................................................................................72 J. Compilation Procedures ........................................................................................................72

SSARS Nos. 21-23: Statements on Standards for Accounting and Review Services: Clarification and Recodification

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K. The New Accountant's Compilation Report........................................................................74 L. Elimination of Management-Use Only Financial Statements ..............................................90 M. Examples of the Accountant's Compilation Reports on Financial Statements...................91 N. Documentation in a Compilation Engagement ..................................................................108 O. Change from an Audit or Review Engagement to a Compilation Engagement ................109 P. Compilation of Personal Financial Statements...................................................................109 Review Questions and Suggested Solutions ............................................................................118 IV. AR-C Section 90: Review of Financial Statements..............................................................126 A. Introduction ........................................................................................................................126 B. Scope of AR-C 90- Review Engagements .........................................................................127 C. Effective Date.....................................................................................................................128 D. Objective ............................................................................................................................128 E. Definitions ..........................................................................................................................129 F. Requirements for Performing a Review Engagement Under AR-C 90..............................131 G. Illustrative Engagement Letters ........................................................................................136 H. Communication with Management and Those Charged with Governance .......................146 I. Understanding of the Industry .............................................................................................148 J. Knowledge of the Entity......................................................................................................149 K. Designing and Performing Review Procedures .................................................................149 L. Analytical Procedures.........................................................................................................150 M. Inquiries of Members of Management Who Have Responsibility for Financial and Accounting Matters..................................................................................................................153 N. Reading the Financial Statements ......................................................................................155 O. Using the Work of Other Accountants...............................................................................155 P. Reconciling the Financial Statements to the Underlying Accounting Records..................156 Q. Evaluating Evidence Obtained from the Procedures Performed .......................................156 R. Materiality ..........................................................................................................................157 S. Written Representations in a Review Engagement ............................................................158 T. Reporting on the Financial Statements..............................................................................167 U. Review Documentation......................................................................................................206 Review Questions and Suggested Solutions ............................................................................208 V. Implementation of SSARS No. 21.........................................................................................216 Glossary .......................................................................................................................................217

SSARS Nos. 21-23: Statements on Standards for Accounting and Review Services: Clarification and Recodification

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