Whether you're a new or seasoned accountant, it's time for a PCRE refresher. Issued by the Accounting and Review Services Committee (ARSC), this edition contains the latest developments in performing preparation, compilation and review engagements.
You'll find ARCS's best advice on:
- Recently issued Statement on Standards for Accounting and Review Services (SSARS) No. 22, Compilation of Pro Forma Financial Information,
- SSARS No. 23, Omnibus Statement on Standards for Accounting and Review Services, 2016, and
- SSARS No. 24, Omnibus Statement on Standards for Accounting and Review Services, 2018
In addition, enhanced updates and illustrative accountant's reports, plus coverage of international reporting issues are provided--including SSARS No. 24, which is effective on or after June 15, 2019.
Table of Contents:
1 Review of Financial Statements .01-.241
Introduction .01-.03
Applicability .04
Consideration of Materiality in a Review Engagement .05-.11
Requirements .12-.236
General Principles for Performing and Reporting on Review Engagements .12
Professional Skepticism in a Review Engagement .13-.16
Engagement Level Quality Control in a Review Engagement .17-.21
Independence .22-.24
Preconditions for Accepting a Review Engagement .25-.30
Communications with Predecessor Accountants .31-.34
Agreement on Engagement Terms .35-.38
Understanding of the Industry .39
Knowledge of the Entity .40-.68
Designing and Performing Review Procedures .69-.72
Analytical Procedures .73-.113
Illustrative Analytics .114-.119
Inquiries and Other Review Procedures .120-.147
Illustrative Inquiries .148-.149
Reading the Financial Statements .150-.152
Reconciling the Financial Statements to the Underlying Accounting Records .153
Evaluating Evidence Obtained From the Procedures Performed .154-.157
Written Representations .158-.164
Communicating to Management and Others Regarding Fraud or Noncompliance with Laws and Regulations .165-.172
Reporting on the Financial Statements — General .173-.174
Reporting on Financial Statements Prepared in Accordance with a Special Purpose Framework .175-.179
Reporting on Comparative Financial Statements .180-.186
Reporting on Known Departures From the Applicable Financial Reporting Framework .187-.192
Emphasis-of-Matter and Other-Matter Paragraphs in the Accountant’s Review Report .193-.197
Alert That Restricts the Use of the Accountant’s Review Report .198-.201
Reporting on Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country .202-.205
The Accountant’s Consideration of an Entity’s Ability to Continue as a Going Concern .206-.207
Consideration of the Effects on the Accountant’s Review Report .208-.209
Subsequent Events and Subsequently Discovered Facts .210-.216
Initial Review Engagements — Opening Balances .217-.219
Reference to the Work of Other Accountants in an Accountant’s Review Report .220-.222
Supplementary Information That Accompanies Reviewed Financial Statements .223-.225
Required Supplementary Information .226-.228
Change in Engagement From Audit to Review .229-.233
Review Documentation .234-.236
Illustrative Engagement Letters .237
Illustrative Representation Letter .238-.240
Illustrative Accountant’s Review Reports on Financial Statements .241
2 Compilation of Financial Statements .01-.103
Introduction .01-.02
Applicability .03
Requirements .04-.87
General Principles for Performing and Reporting on Compilations of Financial Statements .04
Engagement Level Quality Control in a Compilation Engagement .05-.09
Independence .10-.11
Preconditions for Accepting a Compilation Engagement .12-.17
Agreement on Engagement Terms .18-.21
Knowledge and Understanding of the Entity’s Financial Reporting Framework .22-.26
Reading the Financial Statements .27
Other Compilation Procedures .28-.35
Reporting — General .36-.37
Reporting — Financial Statements Prepared in Accordance with a Special Purpose Framework .38-.41
Reporting — Financial Statements that Omit Substantially All the Disclosures Required by the Applicable Financial Reporting Framework .42-.50
Reporting — Comparative Financial Statements .51-.63
Reporting — When the Accountant is Not Independent .64-.66
Reporting — Known Departures From the Applicable Financial Reporting Framework .67-.72
Reporting — Supplementary Information That Accompanies Financial Statements and the Accountant’s Compilation Report Thereon .73-.75
Reporting — Required Supplementary Information .76-.78
Reporting — Alert That Restricts the Use of the Accountant’s Compilation Report .79-.80
Reporting — Emphasis-of-Matter or Other-Matter Paragraphs .81
Reporting — Financial Statements Prepared in Accordance with a Prescribed Format .82-.87
Compilation of Specified Elements, Accounts, or Items of a Financial Statement .88-.91
Change in Engagement From Audit or Review to a Compilation Engagement .92-.97
Documentation Requirements .98-.100
Illustrative Engagement Letters .101
Illustrative Examples of the Accountant’s Compilation Report on Financial Statements .102
Exhibit — Compilation Reporting Requirements When Independence is Impaired .103
3 Preparation of Financial Statements .01-.50
Introduction .01
Applicability .02-.07
Independence .08-.09
Requirements .10-.49
General Principles for Performing Engagements to Prepare Financial Statements .10
Engagement Level Quality Control in an Engagement to Prepare Financial Statements .11-.15
Preconditions for Accepting an Engagement to Prepare Financial Statements .16-.18
Agreement on Engagement Terms .19-.22
Knowledge and Understanding of the Entity’s Financial Reporting Framework .23-.27
Preparing the Financial Statements .28-.34
Preparation of Financial Statements in Accordance with a Special Purpose Framework .35-.36
Preparation of Financial Statements That Contain a Known Departure or Departures From the Applicable Financial Reporting Framework .37-.38
Preparation of Financial Statements That Omit Substantially All Disclosures Required by the Applicable Financial Reporting Framework .39-.41
Preparation of Financial Statements Included in a Prescribed Form .42-.44
Communication with Management .45-.46
Documentation Requirements .47-.49
Illustrative Engagement Letters .50
4 Compilation of Pro Forma Financial Information .01-.24
Introduction .01
Applicability .02-.03
Requirements .04-.22
General Principles for Compilations of Pro Forma Financial Information .04-.06
Acceptance and Continuance of Client Relationships .07-.09
Agreement on Engagement Terms .10-.13
The Accountant’s Knowledge and Understanding of the Entity’s Financial Reporting Framework .14
Compilation Procedures .15-.16
The Accountant’s Compilation Report on Pro Forma Financial Information .17-.20
Documentation .21-.22
Illustrative Engagement Letter for a Compilation of Pro Forma Financial Information .23
Illustrative Accountant’s Compilation Report on Pro Forma Financial Information .24
5 Preparing or Performing a Compilation or Review of Personal Financial Statements .01-.26
Introduction .01
Accounting Considerations .02-.05
Internal Control with Respect to Personal Financial Statements .06-.08
Agreement on Engagement Terms .09-.11
Fraud and Illegal Acts in an Engagement to Prepare or in a Compilation or Review of Personal Financial Statements .12-.14
Representation Letters .15-.17
Compilation and Review Reports on Personal Financial Statements .18-.20
Departures From the Applicable Financial Reporting Framework .21-.22
Illustrative Engagement Letters .23
Illustrative Representation Letter .24-.25
Illustrations of Accountant’s Compilation and Review Reports on Personal Financial Statements .26
6 Special Considerations — International Reporting Issues .01-.26
Introduction .01-.02
Applicability .03-.04
Requirements .05-.24
Considerations When Accepting the Engagement .05-.09
Compilation or Review of Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country .10-.13
Application of Another Set of Compilation or Review Standards .14-.16
Reporting .17-.24
Illustrative Examples of the Accountant’s Compilation and Review Report on Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country Performed in Accordance with SSARSs and Another Set of Compilation or Review Standards .25
Exhibit — Incremental Procedures Required to be Performed if a Review is to be Conducted in Accordance with SSARSs and International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements .26
Appendix A Overview of Statements on Quality Control Standards
Glossary
Index of Pronouncements and Other Technical Guidance
Subject Index
About the Author :
The American Institute of CPAs (AICPA) is the world's largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the procession.
