SSARSs—General Principles

Question 1

What AICPA standards are applicable to reviews, compilations, and preparation of financial statements for nonissuers?

Answer 1

The Statements on Standards for Accounting and Review Services (SSARSs), are issued by the AICPA’s Accounting and Review Services Committee (ARSC)

Question 2

List the two categories of “requirements” under the AICPA’s General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services.

Answer 2

Unconditional requirements

Presumptively mandatory requirements

Question 3

When can an auditor depart from a “presumptively mandatory requirement”?

Answer 3

In rare circumstances, the accountant may depart from a “presumptively mandatory requirement.” The auditor must document the justification for the departure and how the alternative procedures performed in the circumstances were sufficient to achieve the objectives of the presumptively mandatory requirement (requirement indicated by the word “should”).

Question 4

What three different types of engagements are addressed by the clarified Statements on Standards for Accounting and Review Services (SSARSs)?

Answer 4

1. )Reviews
2. )Compilations
3. )Preparation of financial statements for a client without issuing a report

Question 5

What words indicate “application and other explanatory material” in the clarified SSARSs?

Answer 5

“May,” “might,” and “could”

Question 6

What word indicates an “unconditional requirement” in the SSARSs?

Answer 6

“Must”

Question 7

What word indicates a “presumptively mandatory requirement” in the SSARSs?

Answer 7

“Should”