A6 M1 SSARS Engagements Flashcards
preparation engagement
-prepare F/S per specific financial reporting framework
-do not perform audit or review services
-provides no assurance
-non-attest service
-determination of auditor independence not required
compilation engagement
-prepare F/S in form that is representation of mgmt without expressing assurance on F/S
-no audit or review services
-provides no assurance
-attest service because it provides a report
-determination of auditor independence required, though auditor does not have to be independent
review engagement
-express limited assurance of no material modifications that should be made to F/S to conform to applicable financial reporting framework
-based on inquiry and analytical procedures performed
-both an assurance (opinion) and attest engagement
-independence required
when there is a performance of more than one service
accountant should issue report that is appropriate for highest level of service rendered
statements on standards for accounting and review services (SSARS)
-Accounting and Review Services Committee of AICPA is authoritative body that issues pronouncements on unaudited F/S of nonissuers
responsibilities of accountant in relation to SSARS
1) sufficient knowledge to apply SSARS
2) professional judgment to apply SSARS
3) able to justify departures from SSARS
Note: SSARS for nonissuers only
accounting services SSARS does not apply
1) preparing adjusting or correcting entries (few, but if many, considered preparation)
2) consulting on financial matters
3) preparing tax returns
4) manual or automated bookkeeping, data processing services
5) processing financial data of other accting firms
6) reviews of interim F/S (applies to SAS)
what three parties are involved in the SSARS engagements?
mgmt, CPA, and intended users of F/S or financial info
mgmt responsibilities for SSARS engagements
1) identifying applicable financial reporting framework and accting policies
2) preparation and fair presentation of F/S per framework
3) IC
4) preventing and detecting fraud
5) entity complies with laws and regulations
6) accuracy and completeness of records, docs, explanations, and significant judgments
7) providing acctnt access to all info and persons
Note: acctnt not accept engagement if mgmt unwilling to do any of following
accountant responsibilities for SSARS engagements
1) obtain knowledge of accting principles, practices of industry
2) comply with relevant ethical requirements of AICPA code of conduct and other regulatory bodies
3) professional judgment per SSARS
4) appropriate engagement level quality control
Note: no responsibility to identify intended users
intended users
-persons or class of persons who understand limitations of engagement and F/S
-can be from same entity or different entities
establishing an understanding with the client
required that a written agreement be made with mgmt (and sometimes those charged with gov.) regarding terms of SSARS engagements
when a special purpose framework is appropriate in form
1) description of special purpose framework, summary of significant accounting policies and description of material differences from GAAP
2) disclosures similar to GAAP included in F/S
distribution of report outside US
-statement referring to note of F/S describing presentation, including identifying country of origin of accting principles
-report in accordance with another set of compilation or review standards
distribution of report in US
-acctnt report in accordance to SSARS and include requirements related to F/S prepared in accordance with special purpose framework
does the financial reporting framework determine what constitutes a complete set of F/S?
Yes
treatment of subsequent events
-acctnt ask mgmt if all events have been reflected in F/S per applicable financial reporting framework
-if not adequately accounted for, its a departure from GAAP or applicable financial reporting framework
is an acctnt required to perform any review procedures after date of review report?
No
subsequently discovered facts before report release date
1) discuss matter with mgmt
2) determine whether F/S need revision and ask mgmt how they intend to address it
what if mgmt updates F/S due to subsequently discovered facts before report release date?
1) accountant should date review report as of a later date
OR
2) dual date review report
Note: if mgmt not revise, but acctnt believes should, acctnt modify review report
subsequently discovered facts known after report release date that existed at date of report
1) advise client to immediately disclose it if material and ask how they intend to address it
2) mgmt revises it than date review report at later date OR dual date
3) determine if revision done in timely manner and mgmt communicate to intended users to not rely on last report
4) mgmt include disclosure of matter
if client refuses to revise F/S with material info
1) notify client acctnt report cannot be associated with F/S
2) notify any regulatory agencies associated with client not to rely on report
3) notify other persons relying on F/S that report not rely on
reporting fraud and noncompliance
-communicated to appropriate level mgmt
-if its materially mistated and mgmt not provide additional or revised info, acctnt withdraw from engagement
accountant action for inconsequential matters, documentation, other options, and confidentiality
1) not communicated
2) in writing or orally
3) withdraw or consult legal counsel if fraud or noncompliance involve owner of business
4) preclude disclosure outside entity except if subpoena, board of accountancy, legal/regulatory requirements
