Compilations & reviews

Dating representation letters in a review

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Charles Hall has a great post at CPA-Scribo: Dating Review Representation Letters.

A few topics covered:

  • He gives a good idea on how to handle situation when client isn’t availble to sign the letter until after the date the review is complete.
  • Do you need to have the signed rep letter in your hands on the day you say the review is complete?

If you haven’t started using Evernote to keep a personal library of reference tools, this article would give you a great reason to learn.

Would be worth your time to check out the article. Also worthwhile to check out Evernote so you can keep a copy of the article handy.

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Frequent issues on Compilations during peer reviews – from the 13/14 Comp and Review Alert

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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

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Frequent issues on Compilations during peer reviews – from the 13/14 Comp and Review Alert Read More »

“Audit. Review. Compilation. What’s the difference?” – New book now available.

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Audit. Review. Compilation. What’s the difference? – Illustrations using a football game, buying a used car, and filling a bucket.

audit-cover

What’s the difference between getting an audit, review, or compilation from your CPA firm? This short, 29 page book will help you understand.

Three illustrations help explain the differences:

  • A football game – How does advancing to the 10-yard line compare to an audit? What would a review look like in a football game?
  • Buying a used car – How does taking the car for a test drive compare to a review?
  • Filling a bucket – How filling it up with water to three different levels illustrates the differences between three levels of service.

This is a compilation of articles at my blog, Nonprofit Update.

The book is now available at Amazon.

Now available here in other formats:

  • ePub format for your iDevices
  • PDF or text
  • Mobi for your Kindle device

Soon to be available at Barnes and Noble.

“Audit. Review. Compilation. What’s the difference?” – New book now available. Read More »

Frequent issues on Reviews during peer reviews – from the 13/14 Comp and Review Alert

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The Compilation and Review Developments – 2013/14 Alert provides some good comments on issues in reviews that pop up frequently during peer 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 engagements. Even wiser step would be to pull out a couple sets of workpapers to see how you compare. (We call that monitoring – write a quick memo that you checked a few files – your peer reviewer will be happy.)

Here’s a few of the common issues.

Document expectations in analytical procedures

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Frequent issues on Reviews during peer reviews – from the 13/14 Comp and Review Alert Read More »

Proposed revision to compilation rules, including new reports

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In October 2013, the ARSC issued an exposure draft to revise the compilation standards. Two of the major changes are a requirement for the engagement letter to be signed by management and a completely new comp report.

The ED is Proposed Statements on Standards for Accounting and Review Services: Preparation of Financial Statements, Compilation  Engagements, and Association With Financial Statements

One key change is a signed, written engagement will be required for a compilation report.  That is discussed in a previous post,

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Proposed revision to compilation rules, including new reportsRead More »

Proposed revision to compilation rules, including new reports Read More »

Proposal for “preparation” of financial statements will require signed, written engagement letters. Same requirement will apply to compilations.

1 Comment / Compilations & reviews /

The two exposure drafts (ED) to revise the compilation process and to create a new level of service for CPAs, now called preparing, will both require a written understanding with the client that is signed by the accountant and management.

Shall we just call that a signed engagement letter? I’m not quite sure what other characterization would apply.

There is a list of specific items that have to be addressed in the engagement letter.

Presumptively mandatory requirement

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Proposal for “preparation” of financial statements will require signed, written engagement letters. Same requirement will apply to compilations.Read More »

Proposal for “preparation” of financial statements will require signed, written engagement letters. Same requirement will apply to compilations. Read More »

New level of service from CPAs – “Preparing” financial statements

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In October 2013, one of the accounting rule setters issued a proposal which creates a new level of service for CPAs. This will be called preparation of financial statements.

Such service will not be subject to the same rules that govern compilations, reviews, or audits.

When the client organization and CPA agree to this approach, the accountant can issue a set of financial statements without any cover report from the accountant. 

The accountant will not be obtaining any assurance on the financial statements and users should not infer any assurance.

I think this will be a big deal.

Technical description

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New level of service from CPAs – “Preparing” financial statementsRead More »

New level of service from CPAs – “Preparing” financial statements Read More »

4 SSARS exposure drafts

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A new service provided by CPAs which won’t require an accountant’s report. It is called ‘preparation’ of financial statements.

Big revision to compilation standards.

Revision of the SSARS into clarity format.

I’ve not mentioned these four exposure drafts, since I’m only diving into the details now.  You can find the exposure drafts on this page.

The specific links are:

These will be a big deal. I think you will really like them.

4 SSARS exposure drafts Read More »

Football as illustration of differences between audits, reviews, and compilations

2 Comments / Audits, Compilations & reviews /

Since football season is in full swing, let’s go to the nearest stadium to compare an audit to a review, to a compilation, and to the newest level of service, a preparation report.

(Cross-post from my other blog, Nonprofit Update.)

Audit

If you were performing an audit, you would be on the field and receive the kickoff at your 20-yard line. A series of passes and runs would slowly move the ball. With effort you would advance to your opponent’s 10-yard line. Good touchdown position.

Advancing the football would be the same as gathering evidence to provide you a reasonable level of assurance so you could issue an audit opinion on the financial statements.

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Football as illustration of differences between audits, reviews, and compilationsRead More »

Football as illustration of differences between audits, reviews, and compilations Read More »

SSARS exposure drafts approved

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Keep your eyes open for drafts from the ARSC by end of October.

The Journal of Accountancy reports these drafts were approved:

  • Preparation of Financial Statements
  • Compilation Engagements
  • Association With Financial Statements.

The JofA article says:

The new, proposed preparation standard would govern engagements in which the accountant prepares financial statements but does not perform a compilation, review, or audit. The standard would require the accountant to place a legend on each page stating that no assurance is being provided.

SSARS exposure drafts approved Read More »

Compilation and Review CPE courses by James Ulvog

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Looking for on-line CPE courses on compilations and reviews? I’ve written or revised a series of courses for CCH which you can find linked below. I’ve quoted liberally from the CCH site. Here is a list of courses with descriptions to follow:

Course summaries:

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Compilation and Review CPE courses by James Ulvog Read More »

“Tragedy of Fraud” e-book now available at Amazon

Leave a Comment / Accounting, Audits, Books you might enjoy, Compilations & reviews, Fraud /

“Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned” describes the tragic consequences from fraud.

There are ripple effects that spread out to harm innocent bystanders.  The perpetrator draws a wide range of well-deserved wages that will be paid in full.

The book looks at two fraud incidents to learn what happens after a fraud is discovered. One took place in a local megachurch and the other in the mayor’s office of a small city.

The book closes with a discussion of the fraud triangle. That’s the idea that three components need to be present for a fraud to take place – opportunity, motivation, and rationalization. There are steps an organization can take to reduce those factors.

You can find the book at Amazon here.

This book is a compilation of blogs posts that have been previously published at Nonprofit Update and Attestation Update. The posts have been edited slightly and reorganized for easier reading.

Major sections of the book: …

“Tragedy of Fraud” e-book now available at AmazonRead More »

“Tragedy of Fraud” e-book now available at Amazon Read More »

Explanation of differences between audits, reviews, and compilations

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On my other blog, Nonprofit Update, I have an explanation of the differences between the 3 levels of services we provide as CPAs.

There won’t be anything new in the post for CPAs. It might give some good information to your clients though.

If it is helpful to explain to your clients the different levels of service, you could refer them to that page, or you could link to the page. I don’t give permission to copy the post. You can refer your clients or potential clients to it, if doing so improves your client’s understanding.

The post in long in terms of the norms for the blogging world and short in term of giving a full explanation of the level of services. I hope it will be helpful for our clients.

Check out: Level of Services Provided by a CPA – The Differences Between Compilations, Reviews, and Audits

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Highlights from compilation and review risk alert – Clarity project

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This is the first of several posts talking about new issues in the compilation and review world.

Last week I read the 2012/13 comp and review risk alert, available here from the AICPA.

Yes, yes, I know I should have read this about 45 days ago. Just a wild guess, but I’ll guess I’m not the only one that has not gotten around to looking at this before now.

I’ll mention a few highlights. If you provide compilation or review services to your clients, it would be wise to read the alert yourself.

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Highlights from compilation and review risk alert – Clarity projectRead More »

Highlights from compilation and review risk alert – Clarity project Read More »