Previous post started a discussion of the specific documentation required for a review. Here is part 2.
Update – SSARS 19 had been replaced by SSARS 21. The entire body of knowledge has been revised. See:
- Flash update on SSARS #21
- Newly approved SSARS will allow a new service, ‘preparation’. Will also require written & signed engagement letters.
- Sample compilation report under SSARS 21
- Sample accountant’s review report for SSARS 21
- Video overview of SSARS 21
- New risk alerts for 2014/2015 are available
SSARS 19 says the documentation for a review should include (remember should is a loaded word in the SSARS literature):
Inquiries – you need to document the significant items discussed during your inquiries. Also need to document management response to your inquiries. SSARS 19 provides latitude to document it in whatever format you desire – you could use checklists, memos, or something else. I’m not sure what you would use other than a memo or the checklist from your 3rd party document provider, but if you come up with something, go for it.
Significant findings or issues – If you find something significant during a review, you need to document it. The example in the literature is a review procedure that suggests the financial statements could be materially misstated. If that happens, obviously requires accountant will address the anomaly, resolve whether the financial statements actually need to be modified, and propose any necessary modifications. Those type of items should be documented.
“Significant unusual matters” – SSARS 19 doesn’t define what those are, but if you come across one of them, you need to document what it was and how you resolved it. I think that if you see a significant unusual matter, you will know it. You would already be highly inclined to documented that anyway, so this doesn’t really change much.
Fraud or illegal acts – SSARS 19 doesn’t require the accountant to do anything special or out of the ordinary to look for fraud or illegal acts in a review. If something jumps out at you (the literature uses the old standby of something comes to your attention), then you need to document your communications with the appropriate level of management.
Representation letter – you gotta get one.
In the next post, a few other comments on documentation and oral explanations.