Engagement Essentials

Chapter 2PRE-ENGAGEMENT CONSIDERATIONS

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

•    Distinguish special purpose framework (SPF) financial statements from GAAP-basis financial statements.

•    Identify other accounting standards (frameworks) available for use in preparation, compilation, or review engagements.

•    Identify independence issues related to preparation, compilation and review engagements.

•    Recall the pre-engagement principles required for SSARS engagements.

•    Identify the requirements for engagement letters.

RESOURCES

Appendix A—Illustrative Engagement Letters

Financial Statement Considerations

A financial reporting framework is a set of criteria used to determine measurement, recognition, presentation, and disclosure of all material items appearing in the financial statements. The standards of a financial reporting framework are established by an authorized or recognized standards-setting organization. The requirements of the applicable financial reporting framework determine the form and content of the financial statements. Financial reporting frameworks include both U.S. generally accepted accounting principles (GAAP) and special purposes frameworks (SPFs). GAAP is promulgated by FASB, the GASB, and the Federal Accounting Standard Advisory Board. SPFs include other comprehensive bases of accounting (OCBOA), the contractual-basis of accounting, and International Financial Reporting Standards issued ...