Frequent issues on Compilations during peer reviews – from the 13/14 Comp and Review Alert
The Compilation and Review Developments – 2013/14 Alert provides some comments on issues that pop up during peer reviews of Compilation engagements.
Previous post mentioned common issues in reviews.
A wise CPA would read through this list and mentally check to see if any of those issues are present in his or her reports.
Here’s a few common issues on comps.
Proper title on financials
Titles for GAAP based financials should say certain things. Those same titles may not be used for tax-basis, cash-basis, or any other financial reporting framework (there’s a new word you can substitute for OCBOA).
If your client has cash-basis financials, that list of assets and liabilities cannot be called a balance sheet. Try something like statement of assets and liabilities – cash basis.
Wording for accountant’s report
Just like with reviews, SSARS 19 made radical changes to the accountant’s report for a compilation. Miss that and you are in big trouble on your peer review. My impression is there are still a lot of CPAs who haven’t caught on to this. If you don’t know what SSARS 19 refers to or what that new three paragraph report looks like, you really need to do some research.
In addition, a specific title to the report is needed along with an addressee or “appropriate salutation”.
I’ve written a lot of posts on the new compilation report. You can see the posts using this tag.
Basis of accounting
The accountant’s report needs to state what financial reporting framework is used for the financials. Specify GAAP, tax-basis, modified cash-basis, FRF-SMEs, or whatever else is used.
Check out the Alert for lots more info. See more discussion here.