Brief summary of proposed changes to compilation rules
A short article in the Journal of Accountancy provides a great summary of the likely changes to SSARS for compilations and ‘preparing’ financial statements. Check out A makeover for compilations by Mike Glynn, CPA. It is a fast read at only 700 words.
Update – See also:
Two of many key points:
First, the compilation standards would only apply when a CPA is engaged to perform a compilation. The ambiguity of when you “submitted” the financials will go away. See the article for a better description. You’ll like it.
Second, here’s the essence of the new “preparation” service that CPAs might get to provide:
The proposed preparation standard would apply when the accountant is engaged to prepare financial statements but is not engaged to perform an audit, review, or compilation on those financial statements. A report would not be required—even when financial statements are expected to be used by or presented to a third party. Instead, the accountant would be required to include a legend on each page of the financial statements stating that no assurance is being provided.
The article reprints a handy chart from the exposure draft that contrasts a compilation engagement to a preparation engagement.
The exposure draft is here. Comments are due by 5/2/14.