Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Sample accountant’s review report for SSARS 21

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The accountant’s report for a review engagement has been revised by SSARS 21. Here is an example of the standard report and then a modification of the standard report.

Copy and paste at your risk.

Illustrative comparative review report

Independent Accountant’s Review Report

[Appropriate Addressee]

I (We) have reviewed the accompanying financial statements of XYZ Company, which comprise the balance sheets as of December 31, 20X2 and 20X1, and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

Management’s Responsibility for the Financial Statements

Management (Owners) is (are) responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Accountant’s Responsibility

My (Our) responsibility is to conduct the review engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require me (us) to perform procedures to obtain limited assurance as a basis for reporting whether I am (we are) aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. I (We) believe that the results of my (our) procedures provide a reasonable basis for our conclusion. {Note: option of my / our should have been included at end of sentence.}

Accountant’s Conclusion

Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

[Signature of accounting firm or accountant, as appropriate]

[Accountant’s city and state]

[Date of the accountant’s review report]

 

A few preliminary observations

AR90.39 makes a title for the report, specifically including the word Independent, a presumptively mandatory requirement. Same with the addressee and the section headings. I’m glad the word is addressee and not salutation.

AR90.A74 says the city and state can be in the letterhead instead of the bottom of the page.

AR90.A64 says the accountant may consider adding a comment on each page of the financial statements referring to the accountant’s review report. The use of the phrase “may consider” means that is not a requirement. You may add the comment if you wish. To repeat the point, that explanation is in the Additional and Other Explanatory Matter section, not the requirements; it is not required to include such a comment.

Visually this looks somewhat similar to an audit report. It is visually very different from the new compilation report.

Modified review report

Here is a sample of the standard comparative review report modified for:

  • Single year presentation
  • Sole practitioner
  • City and state on letterhead
  • Reference to US GAAP instead of APGA USA

 

[Letterhead with accountant’s city and state]

Independent Accountant’s Review Report

Board of Directors [which is the appropriate Addressee in this example]

XYZ Company

I have reviewed the accompanying financial statements of XYZ Company, which comprise the balance sheet as of December 31, 20X2 and the related statements of income, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I do not express such an opinion.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Accountant’s Responsibility

My responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require me to perform procedures to obtain limited assurance as a basis for reporting whether I am aware of any material modifications that should be made to the financial statements for them to be in accordance with U.S. generally accepted accounting principles. I believe that the results of my procedures provide a reasonable basis for my conclusion.

Accountant’s Conclusion

Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with U.S. generally accepted accounting principles.

[Signature of accountant]

[Date of the accountant’s review report]

 

Update – See also:

Written by Jim Ulvog

October 29, 2014, 8:35 am at 8:35 am

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