Chapter 1

Question 1

When does AR-C Section 70 Applies?

Answer 1

Preparation of F/S
– prior to audit or review by another accountant
– to be presented alongside tax return
– to be presented alongside financial plan
• Preparation of single F/S with substantially all
disclosures omitted
• Using information in G/L to prepare F/S outside
of an accounting software system

Question 2

– When Section 70 Does NOT Apply

Answer 2

Preparing F/S when engaged to perform attest
services on those F/S
• Preparing tax returns or other data solely for
submission to taxing authorities
• Personal F/S prepared for inclusion in written
personal financial plans prepared by the
accountant
• F/S prepared in conjunction with litigation
services that involve pending or potential legal
or regulatory proceedings
Maintaining depreciation schedules
• Preparing or proposing certain adjustments,
such as deferred income taxes, depreciation, or
leases
• Drafting F/S notes
• Entering G/L transactions into accounting
software system

Question 3

What are the minimum requirements for SSARS section 70?

Answer 3

Signed engagement letter with required
minimum elements
• Understanding of the applicable financial
reporting framework and significant accounting
policies intended to be used:
– Describe use of a special purpose framework on
face of F/S or notes
• Prepare the F/S with necessary disclosure that
no assurance provided
Discuss any significant judgments applied with
management, ensuring management accepts
responsibility
• If F/S are deemed incomplete, inaccurate, or
otherwise unsatisfactory – request additional or
corrected information from management:
– Disclose any known material departures in the F/S on
face or in notes

Question 4

Example of Accountant Provided Disclaimer

Answer 4

The accompanying financial statements of XYZ
Company as of and for the year ended
December 31, 20XX, were not subjected to an
audit, review or compilation engagement by me
(us) and, accordingly, I(we) do not express an
opinion, a conclusion, nor provide any
assurance on them.
– Signature, date and city/state

Question 5

What happens if Lack of Assurance Statement

Unable to be Provided by management?

Answer 5

If management is unable to include a statement
on each page, the accountant should EITHER:
– Issue a disclaimer that makes clear that no assurance
is provided
– Perform a compilation engagement

Question 6

What happens if company is Substantially Omitting All

Disclosures?

Answer 6

Disclose omission in the F/S
• Do not accept engagement if intent is to
mislead F/S users
• If few matters disclosed, label as “Selected
Information – Substantially All Disclosures
Required by (name framework) Are Not
Included”

Question 7

Assurance

Answer 7

Assurance is a concept of the attest function. It is the practitioner’s satisfaction about the reliability of an assertion being made by one party for use by other parties. Assurance is the degree of certainty with which a practitioner can support, through evidence gathered, the correctness of a conclusion about the reliability of a written assertion that is the responsibility of another party. Assurance can be described in subjective terms only.

Question 8

What are the Principles of Professional Conduct

also known as: Ethical Principles

Answer 8

The Principles of Professional Conduct are broad guidelines that provide the framework for the Rules of Professional Conduct. The principles do not represent rules that must be followed and for which disciplinary action can be taken, but are the spirit behind the rules. They set the tone, the aspirations, and the ideals.

The principles are divided into six articles (ET 0.300):

Responsibilities
The Public Interest
Integrity
Objectivity and Independence
Due Care
Scope and Nature of Services