Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Option to explain reasons for lack of independence in SSARS 19 compilation

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An option to disclose the reasons for a lack of independence when performing a compilation has been introduced by SSARS 19.  Now the accountant can explain in the report why independence is impaired.  Previously, the accountant could not provide any explanation for lack of independence.

Here are some examples along with a rather important condition.

 A critical qualifier is that the accountant must provide all of the reasons for lack of independence if any are offered.

Here are a few examples of the explanation that could be provided:

  • I am not independent with respect to ABC Incorporated as of and for the year ended December 31, 2010, because I had a direct financial interest in ABC Incorporated.

 

  • We are not independent with respect to ABC Incorporated as of and for the year ended December 31, 2010, because an immediate family member of one of the members of the engagement team was employed by ABC Incorporated.

 

  • I am not independent with respect to ABC Incorporated as of and for the year ended December 31, 2010, because I performed certain accounting services that impaired my independence. 

(SSARS 19 allows the accountant to explain what services were provided, which might be an appealing option in certain circumstances.)

Obviously you need to modify the name and year-end of these examples along with adjusting for whether you are in a one-partner or multi-partner firm.

Visit poll here to see how other accountants plan to handle this option.

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.

Written by Jim Ulvog

January 4, 2011, 7:40 am at 7:40 am

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