ssars 21 training powerpoint template

Insert
Your
Firm’s
Logo
Here

Exploring SSARS 21: A Look at
An Overview of the Changes and Impacts for Our
Preparation,
Compilation and
Clients and Our Practice
Review Services


Instructions To Firms
Below are some suggestions when using this
PowerPoint to update your team members on SSARS
21.
• This PowerPoint is an overview of significant changes to
compilation and review engagements and an introduction to the
preparation service. It should be used to augment your
understanding of SSARS 21. Reviewing this is not a substitute
for reading and understanding the actual guidance.
• Several slides have a comment note for you to consider the
application based on your current practices (and consider
incorporating relevant examples), and there are likely others
throughout the PowerPoint

Once you have tailored this PowerPoint to your firm’s
current practices, delete this slide
Private Companies Practice Section

2


Objective
To provide an overview of changes resulting
from SSARS 21
•
•
•
•
•

Overview
Effective Dates
AR-C 70 - Preparation
AR-C 80 - Compilation
AR-C 90 - Review

Private Companies Practice Section

3


General Overview of
SSARS 21

Private Companies Practice Section

4

SSARS 21

Supersedes all existing AR sections except for AR
Section 120, Compilation of Pro Forma Financial
Information
•

Prospective financial information is currently codified in Attest Standards

Private Companies Practice Section

5


General Overview of SSARS 21
SSARS No. 21 is formatted into four separate
sections:
•

•
•
•

Section 60, 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

These sections have been codified with the prefix
“AR- C” to denote them from the extant AR
sections.
Private Companies Practice Section

6


Effective Date
Effective for financial statement periods ending on
or after December 31, 2015
Early implementation is permitted
Interim engagements can be performed in
accordance with SSARS 21 or SSARS 19

Private Companies Practice Section

7


Section 60 – General
Principles

Private Companies Practice Section

8

Section 60 – General principles for SSARS
Engagements
Replaces AR Section 60, Framework for Performing
and Reporting on Compilation and Review
Engagements
Comply with the general principles in Section 60 in
addition to the relevant sections based on whether
the engagement is a preparation, compilation or
review
Not expected to result in changes to existing
practice
Private Companies Practice Section

9


Section 60 – General principles for SSARS
Engagements
AR-C Section 60 includes requirements with guidance on:
•
•
•
•
•

Ethical requirements
Professional judgment
Conduct of the engagement
Engagement level quality control
Acceptance and continuance of client relationships and engagements

• Note to firms: Additional details about each of these
requirements is included in the speaker notes. Firms may
choose to add these details as additional slides

Private Companies Practice Section

10


Section 70 – Financial
Statement Preparation

Private Companies Practice Section

11


Section 70 – Overview
New non-attest financial
statement preparation
service
Bright line between
accounting services
(preparation) and reporting
services (compilation or
review)
Financial statements may be
provided to third parties
Private Companies Practice Section

12


Section 70 – Overview
Applies when engaged to prepare financial
statements but not engaged to perform an audit,
review, or compilation on those financial statements.
Does not apply when
• engaged to merely assist in preparing financial statements
• the financial statements are prepared as a by-product of
another engagement

The understanding with the client as to what the
engagement entails is important.

Private Companies Practice Section

13


Section 70 – Overview
Examples of when AR-C 70 may apply
• Preparation of financial statements prior to audit or review by
another accountant
• Preparation of financial statements to be presented
alongside the tax return
• Preparation of personal financial statements for presentation
alongside a financial plan
• Preparation of a single financial statement

• Using the information in a general ledger to prepare financial
statements outside of an accounting software system

Private Companies Practice Section

14


Section 70 – Overview
Examples of when AR-C 70 does not apply
•

•
•
•

Preparation of financial statements when the accountant is
engaged to perform an audit, review, or compilation of such
financial statements
Preparation of financial statements with a tax return solely for
submission to taxing authorities
Personal financial statements that are prepared for inclusion
in written personal financial plans prepared by the accountant
Financial statements prepared in conjunction with litigation
services that involve pending or
potential legal or regulatory proceedings

Private Companies Practice Section

15

Section 70 – Planning
An engagement letter signed by both the accountant
and management or those charged with governance
is required
• Note to Firms: Add reference to location of preparation
engagement letters for SSARS 21

No determination about independence is required
• The firm may want to maintain independence in case attest
services are requested in future
• Note to Firms: Add reference to location of independence
policies or person to whom questions should be directed

Identify clients who may be interested in engaging
us to perform preparation engagements.
• SSARS 8 engagements
• Accounting assistance
Private Companies Practice Section

16


Section 70 – Fieldwork
Obtain an understanding of the financial
reporting framework and significant
accounting policies
Discuss significant estimates and judgments
with clients

• Client needs to understand
• Client needs to accept responsibility

Prepare the statements using the records
and explanations provided by management
• Not required to verify the completeness or accuracy of
information
Private Companies Practice Section

17


Section 70 – Financial Statements
Financial statements can be prepared with or
without disclosures
• Disclose that substantially all disclosures are omitted

If using a special purpose framework include a
description
Financial statements can be prepared with a known
departure but must be disclosed

Private Companies Practice Section

18


Section 70 – Legend/Disclaimer
No report is required, even if the financial
statements are expected to be used by a third party

A legend is required on each page of the financial
statements indicating, at a minimum, “no assurance
is provided.” Examples:
• No assurance is provided on these financial statements.
• These financial statements have not been subjected to an audit,
review, or compilation engagement, and no assurance is
provided on them.
• Other statements that convey that no assurance is provided on
the financial statements are acceptable.
Note to firm: see speaker notes for additional considerations.

The legend can be shown as headers or footers.
Private Companies Practice Section

19


Section 70 – Legend/Disclaimer
The accountant or the accountant’s firm name is not
required to be included, although it can be.
• Note to Firms: Document firm policy if name will or will not
be included

Options if the legend is not included:
•
•
•
•

Issue a disclaimer

Perform a compilation engagement; or
Resign.
Note to Firms: Document which option the firm will pursue
if a legend is not included

Keep a copy of the statements in the workfiles
Private Companies Practice Section

20


Peer Review Requirements
Note to firms: determine whether you wish to review
peer review requirements in your training session.
Firms that only perform preparation engagements are
not required to enroll in AICPA PRP
A firm’s preparation engagements are included in the
scope of a peer review when the firm either elects to
enroll in the program or is already enrolled due to
other engagements it performs
Changes are effective for peer reviews commencing
on or after February 1, 2015
Private Companies Practice Section

21


Section 80 – Compilation
Engagements

Private Companies Practice Section

22


Section 80 – Overview of Changes
Applies when the accountant is engaged to perform a
compilation engagement
Some changes to the engagement letter
A report is always required
Independence is a required consideration
Management use only financial statements (SSARS 8
engagements) are no longer an option.

Private Companies Practice Section

23


Section 80 – Planning

Requires an updated engagement letter
• Signature by both the accountant and the client is required.
• Note to Firms: Document location of engagement letters
updated for SSARS 21

One change to engagement letter is that
management’s responsibilities are clarified
• Clients may be concerned that management’s responsibilities
have changed, but they have not.

• Talking points available to help frame the conversation

Private Companies Practice Section

24


Section 80 – Fieldwork
No changes to procedures

Private Companies Practice Section

25