A6 Flashcards
Accounting and Review Services Commitee of AICPA
Authoritative body designated to issue pronouncements (SSARS) in connection with the unaudited FS of nonissuers
Engagements which require following SSARS
Prepare, compile, or review FS of a nonissuer (not applicable to working trial balance)
Prepare, compile, or review specific elements or accounts of a nonissuer’s FS
Prepare or compile proforma financial info of a nonissuer
Establishing an understanding with a client when accepting a compilation should include:
Objectives of engagement
Management’s and accountant’s responsibilities
Limitations of engagement
Statement that engagenent can’t be relied upon to disclose errors, fraud, noncompliance
Identification of applicable reporting framework
Form and content of compilation report
A compilation report prepared in accordance with a special purpose framework should include the following in an additional paragraph:
References management’s responsiblity for determining applicable reporting framework is acceptable
Indicates FS are prepared in accordance with this framework
Refers to the note in the FS that describes the framework
(Regulatory only) Describes purpose for which FS are prepared
Required Review Procedures
Obtain understanding with client
Obtain knowledge of company’s business
Make inquiries of management, others in company
Perform analytical procedures
Obtain client representation letter
Evaluate and communicate results (use professional judgement
Accountant’s Responsibility/conclusion paragraph for a Review
States accountant’s responsibility is to conduct a review in accordance with SSARS
States that the standards require accountant to obtain limited assurance
State that accountant believes results provide a reasonable basis for conclusion
States that accountant is not aware of any material modifications that should be made to FS
Other Matter paragraph for review in which prior year was audited
State that prior period statements were audited
Date of previous report
Opinions expressed in the prior year and any reasons for modification of opinion
State no auditing procedures have been performed this year
Events where accountant has option to include an emphasis-of-matter
An uncertainty relating to future outcome of unusually important litigation or regulatory action
A major catastrophe that effects the entity’s financial position
Doubts about going concern where management has plans to alleviate
Significant transasctions with related parties
Unusually important subsequent events
Instances where accountant should modify review report
Use of a special purpose framework, where FS do not include a description of the framework and/or how it differs from GAAP
Missing Summary of Significant Accounting policies
Informative
Departures from applicable reporting framework (unless modification not adequate, then withdraw)
Positive assurance provided in a comfort letter
Opinion as to whether the audited financial statements comply in form with the accounting requirements of the SEC Act of 1933
The CPA’s independence
Direct Financial Interest examples
Ownership interests held directly in a client.
Stock ownership
Covered member is in a partnership with client
Covered member is a trustee in a client’s trust fund
Indirect financial interest involves a removed relationship
Involves a removed relationship.
Member owns shares in a mutual fund with client
Member owns a direct financial interest in a company with a direct financial interest in client
Covered Member Business relationships that impair independence
Director, officer, or position where covered member acts in management capacity
Member of client’s board of directors
Promoter, underwriter, broker-dealer, voting trustee
Stock transfer or escrow agent
General counsel
Trustee for client’s pension or profit sharing trust
General Standards for engagements
Professional Competence
Due Professional Care
Planning and Supervision
Sufficient Relevant Data
Covered member services that impair independence
Bookkeeping Appraisal or valuation services Actuarial services Internal audit outsourcing services Human resources Broker, dealer, investment advisor services Legal services Expert services unrelated to the audit Services to client's officers
