SSARS/SSA

Question 1

Statements on Standards for Accounting & Review Services (SSARS)

Answer 1

Standards issued by the Accounting and Review Services Committee (ARSC) of the AICPA that apply to engagements in which a CPA is associated with the unaudited financial statements of nonissuer clients.

Question 2

Assurance Engagement

Answer 2

An engagement for which an accountant issues a report designed to enhance third party and management confidence in financial statements or other information. Audits, reviews, and attestation engagements are assurance engagements, while compilations and preparation engagements are nonassurance engagements.

Question 3

Preparation Engagement

Answer 3

An engagement in which the accountant prepares financial statements on behalf of a client, applying a specified financial reporting framework, without endeavoring to obtain or provide any assurance as to the accuracy or completeness of the information in the financial statements and without issuing a report.

Question 4

Compilation

Answer 4

An engagement in which an accountant applies accounting and financial reporting expertise to assist management in putting financial information into the form of financial statements and issues a report without endeavoring to obtain or provide any assurance in relation to those financial statements. A nonattest engagement unless the accountant is independent. Must indicate lack of independence in the report.

Question 5

Review

Answer 5

An engagement in which an accountant uses inquiries, analytical procedures, and other review procedures, including the obtaining of a letter of representation from the client, to obtain limited assurance (i.e., negative assurance) that financial statements are not in need of material modification in order to be in conformity with the applicable financial reporting framework.

Question 6

Management Representation Letter

Answer 6

A communication from management to the accountant, required to be obtained by the accountant in a review or audit engagement, in which management acknowledges its responsibilities for the financial statements and internal control over financial reporting and confirms information obtained from management by the auditor, often as a result of inquiries.

Question 7

Downgrading an Engagement

Answer 7

If asked to downgrade an engagement (eg, a nonissuer audit to a review or compilation), the reasons and additional cost and effort need to be considered. If reasonable, make No Reference to the original engagement or the reasons for the downgrade.

Question 8

Review of Interim Financial Statements (10Q)

Answer 8

A review of a public company’s quarterly financial statements, conducted by applying PCAOB standards as opposed to SSARS.