ASSARSST21P - Journal of Accountancy

[Pages:216]Statement on Standards for Accounting and Review Services

Issued by the Accounting and Review Services Committee

21

October 2014

Statements on Standards for Accounting and Review Services: Clarification and Recodification

(Supersedes all outstanding Statements on Standards for Accounting and Review Services through No. 20 except Statement on Standards for Accounting and Review Services No. 14, Compilation of Pro Forma Financial Information, as amended [AICPA, Professional Standards, AR sec. 120])

Statement on Standards for Accounting and Review Services

Issued by the Accounting and Review Services Committee

21

October 2014

Statements on Standards for Accounting and Review Services: Clarification and Recodification

(Supersedes all outstanding Statements on Standards for Accounting and Review Services through No. 20 except Statement on Standards for Accounting and Review Services No. 14, Compilation of Pro Forma Financial Information, as amended [AICPA, Professional Standards, AR sec. 120])

10616-344

Copyright ? 2014 by American Institute of Certified Public Accountants, Inc. New York, NY 10036-8775

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ISBN: 978-1-94165-139-1

Foreword

In October 2011, the Auditing Standards Board (ASB) reached a major milestone in its project to redraft all the auditing sections in the Codification of Statements on Auditing Standards (contained in AICPA Professional Standards), with the release of Statement on Auditing Standards (SAS) Nos. 122?124. The clarified auditing standards are designed to make the standards easier to read, understand, and apply.

The Accounting and Review Services Committee (ARSC) concluded that by undertaking a similar clarity project, it would serve the public interest and have all professional literature for audits, reviews, and compilations drafted using the same conventions. In addition, the resulting clarified compilation and review standards would be easier to read, understand, and apply.

In May 2010, ARSC approved a project to revise all existing compilation and review standards in the Codification of Statements on Standards for Accounting and Review Services (AR sections of AICPA Professional Standards) substantially using the drafting conventions adopted by the ASB in clarifying the auditing literature.

ARSC determined, however, that there would be certain differences between its clarity drafting conventions and those adopted by the ASB. Specifically, ARSC determined to not include specific application guidance with respect to governmental entities and smaller, less complex entities. Accordingly, the clarified SSARSs have been drafted in accordance with ARSC's clarity drafting conventions, which include the following:

? Establish objectives for each clarified AR-C section ? Include a Definitions section, where relevant, in each clar-

ified AR-C section ? Separate requirements from application and other explan-

atory material ? Number application and other explanatory material para-

graphs using an A- prefix and present them in a separate section that follows the Requirements section ? Use formatting techniques, such as bullet lists, to enhance readability

ii Statement on Standards for Accounting and Review Services No. 21

Convergence

Whereas the ASB used, where applicable, the corresponding International Standards on Auditing (ISA) as a base when drafting each clarified auditing standard, ARSC has used AU-C section 930, Interim Financial Information (AICPA, Professional Standards), as a base for the clarified review literature. AU-C section 930 was clarified using the corresponding international standard for reviews of interim financial statements as a base (International Standard on Review Engagements [ISRE] 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity), and there are no substantive differences between AU-C section 930 and ISRE 2410. ARSC determined that it was more appropriate to converge with the corresponding limited assurance engagement guidance in the American auditing literature than with ISRE 2400 (Revised), Engagements to Review Historical Financial Statements.

Although ARSC has considered International Standard on Related Services (ISRS) 4410, Engagements to Compile Financial Statements, and has adopted certain of the requirements, section 80 has not been fully harmonized with ISRS 4410 because some of the underlying premises (for example, the requirement to determine independence) are different in the United States of America.

SSARS No. 21

Statement on Standards for Accounting and Review Services (SSARS) No. 21 supersedes all outstanding SSARSs through No. 20, except SSARS No. 14, Compilation of Pro Forma Financial Information, as amended (AICPA, Professional Standards, AR sec. 120). SSARS No. 14 is currently being redrafted and will be issued as a separate SSARS when finalized.

All compilation and review interpretations of the SSARS have been considered in the development of the clarified SSARS and either been incorporated accordingly or will be considered for inclusion in the 2015 edition of the AICPA Guide Review, Compilation, and Financial Statement Preparation Engagements: Engagements Performed in Accordance With SSARSs.

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