SSARS 21 – A Video Overview of the Preparation Standard

 

I recently provided a slide deck overview of the new SSARS 21 Preparation standard. Here’s a video overview. (Sorry, no CPE credit provided, but I hope you find it helpful anyway.)

October 13, 2015, Update to Post

My new book, Preparation of Financial Statements and Compilation Engagement, is available on Amazon.com. Click here to see the book: Preparation of Financial Statements & Compilation Engagements.

The book includes sample financial statements using the preparation and compilation options. Sample engagement letters are also included. This book is a quick-reference guide that takes the mystery out of the new standards.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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11 thoughts on “SSARS 21 – A Video Overview of the Preparation Standard

  1. Hi,

    I am still a bit fuzzy on what constitutes bookkeeping vs. preparing financial statements when we prepare and submit to the client journal entries for adjusting the G/L and then prepare the financial statements.

    According to the video, I now have the understanding that the above would not fall under the guidance of Section 70 since it is bookkeeping services. So, if that is the case, would we need to then be engaged to perform a compilation with a compilation report?

    What if we are just doing bank recs and AJEs and then preparing a Quick Books financial statement for internal use purposes? Can we do that without performing a compilation?

    Thanks so much for your advice.

    Tom

    • Tom, if you only provide bookkeeping services and don’t issue financial statements, then Section 70 does not apply.

      The key is whether you issue financial statements. If you do, then you will either

      (1) follow section 70 and issue the statements without a compilation report or
      (2) if you are engaged to perform a compilation, you will issue the financial statements with a compilation report

      You will only issue a compilation report when you are engaged to do so, as evidenced by the engagement letter. If the engagement letter does not say you are to issue a compilation report, then you will not.

      So the bookkeeping functions don’t really affect the two options: (1) issuing without a compilation report or (2) issuing with a compilation report. The reason section 70 addresses “bookkeeping” is simply to define whether the CPA is subject to section 70 or not.

      Hope that helps.

    • Tom, If you perform bookkeeping functions in Quickbooks and then desire to issue financial statements without a compilation report, you can do so using the Section 70 Preparation guidance.

  2. How will this affect peer reviews? Will financials issued without a report be subject to peer review as the financial is issued without assurance or is disclaimed and does not have a report attached? If not subject to peer review the cost savings and stress reduction for CPAs would be big. And this will make a compilation special and therefore worth more permitting a CPA to charge more while better serving client needs.

    • Andrew, the Peer Review Board will address the applicability to peer reviews in January 2015, so I’m very interested to see how this goes. They started out with a draft to exclude the Preparation work from peer reviews, but it appears they may be changing course. We’ll see. thanks for commenting.

  3. Thank you Charles Hall for this video. It says a lot in 12 minutes.

    I am glad the point about possible lawsuits arising was mentioned. I hope we CPAs can resist the temptation of becoming complacent about following accounting standards when we have been relieved of some of the previous compliance “burdens”. I remember the old discussions about “plain paper” financials from the 1990s. Will the public be better served by this change?

    Maybe that’s why the Peer Review Board is having second thoughts about exempting financial statement preparation? We will see.

    • Stephan, I agree. It will be interesting to see how the Peer Review Board responds to this issue. I am thinking the Board will include the Preparation service in peer reviews (with a possible exception for firms that only provide the Preparation service and nothing else).

  4. Very helpful video, Charles. A couple of questions: Does the term financial statements include reports or schedules prepared by the CPA such as sales trend schedules accompanied by line charts and pie charts? And if so, does section 70 of SSARS 21 apply?

    • Greg, the term “financial statements” does not include other historical or projected information–the types of information commonly included in supplementary information. That said, AR-C 70 can be applied to supplementary information such as sales trend schedules and pie charts. Hope that helps.