Annual Update for Accountants and Auditors: 2020

Chapter 10Preparation, Compilation, and Review Engagement Update

Learning objectives

• Distinguish among the nature and elements of reviews, compilations, and preparation engagements of financial statements following the completion of the Statement on Standards for Accounting and Review Services (SSARS) Clarity Project.
• Identify the key provisions of SSARS No. 24, Omnibus Statement on Standards for Accounting and Review Services—2018.
• Identify the key provisions in SSARS No. 25, Materiality in a Review of Financial Statements and Adverse Conclusions.

This chapter highlights specific issues related to nonaudit financial reporting services that CPAs can provide. It is important to note, however, that many of the issues already discussed arising from current economic and regulatory developments are relevant to nonaudit financial statement engagements as well.

The most notable recent developments for nonaudit services is the issuance of SSARS No. 24 in May 2018 and the issuance of SSARS No. 25 in February 2020. The requirements of these new SSARS are summarized in the chapter.

Reminder of SSARS-related engagements

The Accounting and Review Services Committee (ARSC) completed its Clarity Project in October 2014 when it issued SSARS No. 21, Statement on Standards for Accounting and Review Services: Clarification and Recodification (AR-C sec. 60, 70, 80, and 90)¹ and SSARS No. 22, Compilation of Pro Forma Financial Information, (AR-C sec. 120). The primary purpose of the Clarity ...