SSARS 23: Parts are Effective Immediately

SSARS 23 affects compilation and review reports

SSARS 23, Omnibus Statement on Standards for Accounting and Review Services–2016, was issued in late October 2016, but parts of the standard are applicable immediately.

SSARS 23 Changes Effective Now

The two key changes effective immediately are:

  1. An update of compilation and review report language regarding supplementary information
  2. You must now report departures from the applicable financial reporting framework in the compilation report
SSARS 23

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1. Update of Compilation and Review Report Language for Supplementary Information

The compilation and review report language regarding supplementary information changed with the issuance of SSARS 23.

Compilation Report Supplementary Information Language

The compilation report language regarding supplementary language is as follows:

Compilation Report Language for Supplementary Information Subject to Compilation Procedures

The accompanying [identify the supplementary information] is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management. The supplementary information was subject to our compilation engagement. We have not audited or reviewed the supplementary information and do not express an opinion, a conclusion, nor provide any assurance on such information.

Compilation Report Language for Supplementary Information Not Subject to Compilation Procedures

The accompanying [identify the supplementary information] is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management. The supplementary information was not subject to our compilation engagement. We do not express an opinion, a conclusion, nor provide any assurance on such information.

Review Report Supplementary Information Language

The review report language regarding supplementary language is as follows:

Review Report Language for Supplementary Information Subject to Review Procedures

Other Matter

The accompanying [identify the supplementary information] is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from, and relates directly to, the underlying accounting and other records used to prepare the financial statements. The supplementary information has been subjected to the review procedures applied in our review of the basic financial statements. We are not aware of any material modifications that should be made to the supplementary information. We have not audited the supplementary information and do not express an opinion on such information.

Review Report Language for Supplementary Information Not Subject to Review Procedures

Other Matter

The accompanying [identify the supplementary information] is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management. We have not audited or reviewed such information and we do not express an opinion, a conclusion, nor provide any assurance on it.

2. Disclose Departures in the Compilation Report

SSARS 21 allowed CPAs to report departures from the applicable financial reporting framework either in the notes or in the compilation report. SSARS 23 requires that such departures be reported “in a separate paragraph” in the compilation report. In other words, you can no longer just disclose the departure in the notes to the financial statements.

Impact on Peer Reviews

So, what happens if a firm fails to make the revisions to the supplementary information paragraphs as discussed in 1. above?

The February 2017 AICPA Reviewer Alert (the newsletter that peer reviewers receive) says the following:

If a firm failed to update the language in the additional paragraph for review and compilation reports, it would generally not result in a deficiency or significant deficiency. The changes made by SSARS No. 23 in relation to supplementary information are considered further clarifications to existing requirements. Therefore, the following guidance is applicable; PRP Section 6200 Appendix E Areas of Common Noncompliance With Applicable Professional Standards;

List of Matters and Findings That Generally Would Not Result in a Deficiency
Reports
• Omission of phrases or use of phrases not in conformity with the appropriate standards for the report issued

Failing to make the revisions will not result in a deficiency or a significant deficiency in a peer review.

SSARS 21 Book

To see my SSARS 21 book on Amazon, click here.

 

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10 thoughts on “SSARS 23: Parts are Effective Immediately

  1. Question: The supplementary information disclosure is just for required information, correct? We include supplementary information on the compiled financial statements for additional analysis, such as detailed statement of changes in partners’ capital. Are we required to include the supplementary information disclosure on the compilation report?

    • Maria, if supplementary information is attached to the financial statements, then you do need to add the supplementary information paragraph to the compilation report (even if the supplementary information is not required).

      • What constitutes “supplementary information subject to compilation procedures” and “supplementary information not subject to compilation procedures”? Is it also based on whether client engaged us to prepare supplementary information, then it would be subject to compilation procedures?

        • Maria, supplementary information is any information attached to the financial statements that are not a part of the basic financial statements (in other words, information not required by the applicable reporting framework such as GAAP). If supplementary information is provided, then the accountant is required to report on that information (regardless of whether the client engaged the accountant to prepare it). I do, however, think that the engagement letter should include whether supplementary information is to be provided in the report.

  2. Thank you for bringing this to everyone’s attention, Charles! I just went to an AICPA A&A update seminar on November 14th through the Ohio Society of CPAs, and there was absolutely NO MENTION of this!!!

  3. We are looking to update our supplementary information paragraph in out compilation report. With the effective date being the date issued October 23 does this affect reports for prior periods that have not been issued yet?

    • Stephen, yes. From now on I would use the SSARS 23 language for all compilations with supplementary information, regardless of the period-end.

      So, for example, if you have a June 30, 2016, compilation to be issued today (November 29), I would use the SSARS 23 supplementary information language. By contrast, if that same compilation was issued on October 1, you’d use the old SSARS 21 language.

  4. Happy New Year Sir,

    We are updating our engagement letters and report letters as required by ssars 23 for review reports having supplementary information. It appears there is no effect or change needed with regard to mgmt rep letters. Can you confirm that?