The Statement on Standards for Accounting and Review Services (SSARS) is a section of the professional standards set out by The American Institute of CPA’s (AICPA), seeking to review earlier standards for reviewing and compiling financial statements and setting out the terms of engagement between the CPA’s and the parties. This section has been set out by the Clarity Project of the AICPA’s Accounting and Review Services Committee (ARSC). The terms of engagement constitute a principal element of Section 21 of the SSARS.
The AICPA’s Section 21 is a significant improvement over the earlier standard, Section 19. Having come into effect in December 2015; AICPA Section 21 overrides the earlier standards. On its part, Section 19 was considered an improvement over the existing standards that had been getting enacted from 1978. It stressed the importance of the independence of the CPA, in that they should not be part of the board or management of the company whose accounts they are auditing. It also required the CPA to obtain an engagement letter before proceeding to prepare and issue financial statements.
Supersedes Section 19
Where Section 21 goes beyond Section 19 is in setting out the clear terms for a new service, that of preparing financial statements. Also, it takes changes brought about by technologies such as the cloud into the accounting profession, into consideration. It sets out these requirements in its four sections, sections 60, 70, 80 and 90. Briefly, these are what these sections represent:
Section 60: Describes the General Principles for Engagements performed in accordance with Statements on Standards for Accounting and Review Services
Section 70: Preparation of Financial Statements
Section 80: Compilation Engagements
Section 90: Review of Financial Statements
The highlight of Section 21 of SSARS is that these sections are clearly demarcated. One prescribed action should follow the other, only after the one taken up is completed. It draws a distinction between, for instance, financial statement preparation and a compilation, which is something that CPA’s have to submit for any financial statement submitted to third parties. In this way, Section 21 is a comprehensive set of regulations.
Complete clarity on Section 21
Want to understand how this section relates to your profession? Want to gain clarity and insights into the ways of the workings of this section? A webinar from Compliance4All, a leading provider of professional trainings for all the areas of regulatory compliance, has all the answers relating to the comprehension and implementation of Section 21 of the SSARS.
At this session, Candace Leuck, who owns Athena Finance Group, Inc., which specializes in strategic planning, distressed entity recovery, valuations, and educational programs; will be the speaker. To register for this highly interesting and valuable webinar, please visit Compilation and Review Updates
Understanding of all aspects of Section 21
The aim of this presentation is to familiarize participants with all the sections of SSARS 21. Participants will be able to understand general requirements for SSARS engagements and learn details of new financial statement preparation engagement requirements. Since Section 21 both supersedes Section 19 and differs from it in many ways, Candace will explain the details pertaining to understanding and implementing Section 21, which includes requirements for engagement letters, requirements for understanding of the client, industry and environment, when SSARS does and does not apply to preparation engagements, attest versus non-attest engagements, reporting requirements, and disclosure requirements.
She will cover the following areas at this webinar:
o Understand general requirements for SSARS engagements
o Learn details of new financial statement preparation engagement requirements
o Review compilation and review engagement requirements
o Discuss the elimination of “management use only” compilations
o Understand new formats for compilation and review reports
o Compare and contrast preparation, compilation and review engagements.
This webinar will be of high use to personnel whose work requires them to implement Section 21 of SSARS, such as Public Accountants, Managerial Accountants, and Financial Accountants.