Wiley Practitioner's Guide to GAAS 2023, 2nd Edition

68AR-C 120 Compilation of Pro Forma Financial Information

• Scope
• Definition of Term
• Objectives of AR-C Section 120
• Requirements
  • General Guidance
  • Acceptance and Continuance of Client Relationships
• Illustrations

SCOPE

AR-C 120 is applicable when an accountant is engaged to compile a compilation report on pro forma financial information. (See the definition in the Appendix to the chapter on AR-C 60.) (AR-C 120.01)

DEFINITION OF TERM

See Appendix C, “Definitions for Preparation, Compilation, and Review—AR-C Standards,” for the definition of the term related to this section: Pro forma financial information.

OBJECTIVES OF AR-C SECTION 120

It is important to note that the requirements in AR-C 60 apply to all SSARS engagements, including compilation engagements. Readers should apply the requirements in the chapter on Section 60 to compilation engagements in addition to the guidance in this chapter. (AR-C 120.05)

The objective of the accountant in a compilation of pro forma financial information is to apply accounting and financial reporting expertise to assist management in the presentation of pro forma financial information and report under this section without undertaking to get or provide any assurance on the pro forma financial information. (AR-C 120.03)

Entities issue pro forma information to show what the significant effects on historical financial information might have been had a consummated or proposed transaction or event occurred at an earlier date—for example, ...