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Compilation and Review

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1. Significant changes to compilation included in 3 proposed standards   WebExclusive

From Staff ReportsThree standards proposed by the AICPA Accounting and Review Services Committee (ARSC) as part of its clarity project include a proposal that would significantly change compilation literature.An exposure draft (ED) invites public comment on the proposals. The ED includes:A proposed, revised compilation standard that would apply when the accountant is engaged to perform a compilation engagement on historical financial statements.A new preparation standard that would apply when the accountant is engaged to prepare financial statements for a client, but is not engaged to perform a compilation, review, or audit with respect to those financial statements.A new association standard that would apply when the accountant agrees to permit the use of his or her name in a report, document, or written communication that also includes financial statements that the accountant may or may not have prepared, and for which the accountant did not issue a compilation, review, or report.ARSC voted in October to expose the proposal for public comment.Comments are due May 2, 2014, and can be submitted by email to Mike Glynn, CPA, a technical manager for the AICPA Auditing and Attest Standards Team who serves as staff liaison to ARSC, at mglynn@aicpa.org.

2. ARSC to propose new preparation, compilation, association standards   WebExclusive

From Staff ReportsThree new standards the AICPA Accounting and Review Services Committee (ARSC) voted Thursday to propose would help practitioners clearly distinguish between preparation and reporting services.ARSC voted to expose for public comment proposals titled Preparation of Financial Statements, Compilation Engagements, and Association With Financial Statements. An exposure draft (ED) is expected to be made public by the end of October, and comments will be accepted through May 2, 2014.The proposed compilation standard was revised after feedback suggested substantial changes from an ED issued last year.

3. U.K. regulator considering mandatory audit firm rotation   WebExclusive

BY Ken Tysiac
A much awaited summary of provisional findings of the U.K. Competition Commission (CC) stated that companies are reluctant to change auditors because they have difficulty comparing alternatives with their existing auditor, prefer continuity, and face significant costs in switching auditors. In addition, the provisional findings, released Friday, stated that instead of protecting investors’ interests, auditors often focus on meeting the needs of senior management who are the key decision-makers on whether to retain their services.

4. AICPA committee withdraws compilation, association ED   WebExclusive

BY Ken Tysiac
The AICPA Accounting and Review Services Committee (ARSC) has voted to withdraw its compilation and association exposure draft in response to comment letters from stakeholders. The compilation proposal would have revised the applicability of the compilation standard but would have retained the compilation service as an attest service.

5. ARSC seeks comment on SSARS proposals   WebExclusive

BY Ken Tysiac
The AICPA Accounting and Review Services Committee (ARSC) has exposed for public comment proposed Statements on Standards for Accounting and Review Services (SSARS) as part of its clarity project. ARSC has separated the proposals in an attempt to make the clarified standards easier to use, understand, and implement.

6. Ethics / Compilation & review  

Two AICPA committees extended comment deadlines to Nov. 30 on recently proposed revisions to professional standards. The proposed change to the ethics rules would require CPAs who prepare financial statements for attest clients to apply the general requirements of Interpretation No. 101-3, Nonattest Services, to maintain their independence.

7. Comment deadlines extended on proposed professional standard revisions   WebExclusive

Two AICPA committees are extending comment deadlines to Nov. 30 on recently proposed revisions to professional standards. The proposed change to the ethics rules would require CPAs who prepare financial statements for attest clients to apply the general requirements of Interpretation No. 101-3, Nonattest Services, to maintain their independence.

8. Auditing / Compilation and review  

The AICPA issued technical guidance on emphasis paragraphs in the auditor’s reports and on independence impairment in compilation reports. Technical Inquiry and Reply (TPA) 9160.28 regards combining going-concern emphasis with another emphasis-of-matter paragraph. This TPA explains that although AU Section 508, Reports on Audited Financial Statements (AICPA, Professional Standards), does not preclude an auditor from combining matters either required to be emphasized or added at the auditor’s discretion, in the auditor’s report, it may be prudent for the auditor to emphasize each matter separately in separate paragraphs.

9. Proposed revisions clarify responsibilities for preparers   CPEDirect

BY Mike Glynn, CPA and Ellen Goria, CPA
In accordance with recently proposed revisions to professional standards, CPAs who prepare financial statements for clients would consider that a nonattest bookkeeping service and would no longer be required to perform a compilation service with respect to those financial statements unless engaged to do so. The changes, proposed in June by two AICPA committees, would require CPAs who prepare financial statements, but are not engaged to perform a compilation, review, or audit, to request that management include a label or notation that makes clear that the financial statements were not compiled, reviewed, or audited.

10. TPAs provide guidance on issues in auditor’s reports, compilation reports   WebExclusive

The AICPA has issued technical guidance on emphasis paragraphs in the auditor’s reports and on independence impairment in compilation reports. Technical Inquiry and Reply (TPA) 9160.28 regards combining going-concern emphasis with another emphasis-of-matter paragraph. This TPA explains that although AU Section 508, Reports on Audited Financial Statements (AICPA, Professional Standards), does not preclude an auditor from combining matters either required to be emphasized, or added at the auditor’s discretion, in the auditor’s report, it may be prudent for the auditor to emphasize each matter separately in separate paragraphs.
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