Reports on comparative financial statements under SSARS 19
What’s the issue?
Reports on financial statements before December 31 are performed and reported upon using the pre-SSARS 19 rules (okay, the technical cutoff is December 15, 2010, but I think for everyone reading this blog the cutoff is December 31). Financial statements ending December 31, 2010 and later are reported upon using SSARS 19.
What then to do when you report on 2010 financial statements (using SSARS 19) and have a report on the 2009 financial statements (which initial reports when issued were based upon pre-SSARS 19 reporting language)?
The big issue is that early implementation of SSARS 19 is prohibited except for the option to disclose reasons for the lack of independence on a comp.
What to do?
Answer – the AICPA issued a technical staff questions and answer document that says you can use the SSARS 19 report language for the prior year comparative information.
The technical reason, for those of us who enjoy such things (which would include me), is that having a report on prior year financial statements for which the report was previously issued is a reissuance of the report and not actually performing a compilation or review of the financial statements. So, you cannot perform a compilation or review on financials prior to December 2010 under SSARS 19 but you can use the SSARS 19 wording to report on a compilation or review you previously issued.
The examples of comparative compilation and review reports in the staff Q&A are the same as the examples I gave, except for the modifications I made to fit context of an NPO. Even though I was running ahead of the AICPA guidance, I got to the right answer.
(Thanks to my buddy Bill for pointing out this staff Q&A.)
Update: I have written a 3-hour online CPE course called Compilation and Review: Practice Issues (Third Edition) available at the CCH Learning Center website. From the course description:
This course was prepared to enable participants who are experienced accountants to improve their knowledge of the issues affecting their compilation and review practices.
Course discussed in more detail at this post.