Compilation Addendum to Conform with SSARS 21



Compilation Addendum to Conform with SSARS No. 21<Date><Client Representative><Client Name><Client Address>Re: Engagement letter addendum required to comply with revised professional standards Dear <Client Representative>:As we agreed in our original engagement letter dated <date>, we are writing to notify you that our compilation of your December 31, 2015, financial statements requires we adhere to the clarified compilation standards effective for periods ending after December 14, 2015. The <monthly/quarterly> financial statements for the periods preceding your December 31, 2015 financial statements are unaffected. Only our compilation of your December 31, 2015 financial statements is impacted by these new standards. Our fees arrangements, <describe other matters addressed in prior engagement letter such as record retention> are not impacted by this addendum to that pilation ServicesWe will compile, from information you provide, the December 31, 2015 balance sheet and related statements of income, retained earnings, and cash flows of <Client Name> for the year ending <date>, and will issue an accountant's report on such financial statements in accordance with the “compilation standards” as set forth in the Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to prepare financial statements in accordance with the financial reporting framework you select, based on information provided by you, and to apply accounting and financial reporting expertise to assist you in the presentation of the financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for them to be in accordance with that financial reporting framework. It is our understanding that you have selected accounting principles generally accepted in the United States of America (US GAAP) as your financial reporting framework and, as such, that is the framework we will use for this engagement.A compilation differs significantly from a review or an audit of financial statements. A compilation does not contemplate performing inquiry, analytical review procedures, or other procedures performed in a review. Consequently, the information provided by management will not be verified, corroborated, reviewed, or audited. Additionally, a compilation does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; tests of accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, the examination of source documents (for example, cancelled checks or bank images); or other procedures ordinarily performed in an audit. Therefore, a compilation does not provide a basis for expressing any level of assurance on the financial statements being compiled. Because we are performing our compilation work as accountants rather than as auditors, <Client Name> should not record or describe our services as an “audit” or “auditing” in its minutes or books of record.Our engagement cannot be relied upon to disclose errors, fraudulent financial reporting, misappropriation of assets, or illegal acts that may have occurred. However, we will inform the appropriate level of management of any material errors and of any evidence or information that comes to our attention during the performance of our engagement that fraud may have occurred. We will also report to the appropriate level of management any evidence or information that comes to our attention regarding illegal acts that may have occurred, unless they are clearly inconsequential. <Name of Firm Representative> is the engagement partner for the compilation services specified in this letter. <His/Her> responsibilities include supervising <Firm>'s services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the compilation report.Responsibilities of ManagementManagement is responsible for providing us with access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters, as well as additional information we may request for this engagement. Management will also provide us with unrestricted access to persons within the entity of whom we determine it necessary to communicate or make inquiries. By your signature below, you understand and agree that management is responsible for the accuracy and completeness of the records, documents, explanations, and other information provided to us, including management’s significant judgments impacting the preparation and fair presentation of the financial statements.As outlined in this letter, we will assist in the preparation of your financial statements and we may advise you about appropriate accounting principles and their application, but the final responsibility for the preparation and fair presentation of the financial statements in accordance with the financial reporting framework you selected, US GAAP, remains with you. Also, as part of our engagement, we may propose standard, adjusting, or correcting journal entries to your financial statements. Management, however, has final responsibility for reviewing the proposed entries and understanding the nature and impact of the proposed entries to the financial statements. By your signature below, you acknowledge that you are also responsible for all management decisions and responsibilities including designating qualified individuals with the suitable skills, knowledge and experience, to be responsible and accountable for overseeing the preparation and fair presentation of your financial statements and any other nonattest services performed as part of this engagement. This includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; as well as identifying and ensuring that the organization complies with the laws and regulations applicable to its activities. We will have no responsibility to identify and communicate deficiencies in your internal control as part of this engagement. Your signature below further acknowledges that you understand and agree that you are responsible for preventing and detecting fraud.Written ReportAs part of our engagement, we will issue a report that will state that we did not audit or review the financial statements and that, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on them. <If applicable add: We will disclose that we are not independent in our report.> If, for any reason, we are unable to complete the compilation of your financial statements, we will not issue a report on such statements as a result of this engagement.[Optional: Our report on the annual financial statements of <Client Name> is expected to read as follows:Management is responsible for the accompanying financial statements of <Client Name>, which comprise the balance sheet as of December 31, <year>, and the related statements of income, retained earnings, 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. 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. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements.<If applicable: We are not independent with respect to <Client Name>.]If management elects to omit substantially all disclosures, we will include an additional paragraph that will read as follows: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.By your signature below, you agree to include our compilation report in any document that contains the referenced financial statements which indicates that we have performed a compilation of such financial statements; and to obtain our written permission before releasing such information.We will be pleased to discuss this letter with you at any time.If the foregoing is in accordance with your understanding, please sign the copy of this letter in the space provided and return it to us.Sincerely,______________________________<Accountant Name><Firm Name>Acknowledged:______________________________<Client Representative><Client Name>______________________________Date ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download