Compilations & reviews

What date should you use for a CPA’s report?

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For a fast summary of the rules for a compilation, review, audit, and agreed upon procedures, check out a superb post by Charles Hall, at his blog CPA-Scribo:  Dating CPA Reports

For each level of service, the post summarizes the rule and provides a citation to the professional literature.

The post also has a discussion of coordinating the representation letter with the final review and dating the report.

Check it out.

What date should you use for a CPA’s report? Read More »

Evaluating a used car as an illustration of the differences between compilation, review, and audit

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I have a post at my other blog, Nonprofit Update which provides an analogy to illustrate the differences between the levels of attestation services provided by CPAs:

Evaluating a used car as an illustration of the differences between compilation, review, and audit

The analogy compares three different ways to figure out the quality of a car. I suggest each of those ways is similar to a level of service. Here’s the conclusion:

  • Look at the car from across the street – very low cost for low quality information – compilation
  • Look around inside in the car and drive it around the block – moderate cost for better information – review
  • Have a mechanic work it over – highest cost in terms of time and money but the best information on the quality of the car – audit

Check out the full post for more details on the analogy.

Evaluating a used car as an illustration of the differences between compilation, review, and audit Read More »

Sample compilation and review reports under SSARS 19 for NPOs

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

Update – SSARS 19 had been replaced by SSARS 21. All the reports have been revised. See:

Here is a list of the sample reports under SSARS available on my blogs.

Sample compilation and review reports under SSARS 19 for NPOs Read More »

What does that risk assessment in a SSARS 19 review look like?

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In a review, the analytical procedures and inquiries should be based on the accountant’s professional judgment.  That judgment is based on the accountant’s understanding of the industry and the client.

According to the SSARS literature, it is also based on the accountant’s awareness of the risk of unknowing failure to modify the review report on financial statements that are materially misstated

That means the accountant should focus analytical procedures and inquiries on those areas where there are increased risks of misstatements.

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What does that risk assessment in a SSARS 19 review look like?Read More »

What does that risk assessment in a SSARS 19 review look like? Read More »

Addition to your client continuance checklist – use ideas from seven habits of spectacularly unsuccessful executives

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Here’s an idea for something to add to your client continuance checklist.

Boil down the major points of The seven habits of spectacularly unsuccessful executives, by Sidney Finkelstein, which he wrote in 2004.  Turn his analysis into a list of major warning signs that suggest you don’t want to keep working with a client.

I’ve just started reading the full article.  Here is a summary, provided by David Albrecht, in his post, Arrogance and Social Media. …

Addition to your client continuance checklist – use ideas from seven habits of spectacularly unsuccessful executivesRead More »

Addition to your client continuance checklist – use ideas from seven habits of spectacularly unsuccessful executives Read More »

Our responsibility as CPAs is to our clients, the shareholders

2 Comments / Audits, Compilations & reviews, Pondering /

Francine McKenna reposts one of her favorite discussions on the responsibility of CPAs: – Madoff, MLK, Buddha And Elusive Nature of Self-Interest

The core question is where do we place our ultimate focus and loyalty?

Management who hired us?  The CFO who could get us fired?  The board of directors? Senior partners of our firm?

No, no, no, and no.

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Our responsibility as CPAs is to our clients, the shareholdersRead More »

Our responsibility as CPAs is to our clients, the shareholders Read More »

Reporting restatements to the California Board of Accountancy

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If you report on financial statements with a restatement of prior year numbers, you may have to notify the CBA.

The board has a very brief summary of the three circumstances when you have to notify them in the current issue of their newsletter, Update.  You can see the short article on page 10 of this issue.

Here is my really fast summary –

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Reporting restatements to the California Board of AccountancyRead More »

Reporting restatements to the California Board of Accountancy Read More »

Compilation and Review Alert for 2012 released by AICPA

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The AICPA has released Compilation and Review Developments – Compilation and Review Alert 2011/12.

Available on CPA2Biz here.

If you are in the comp and review world, it would be a really good idea to read through this alert every year. Usually released about this time, so you can use it for your year-end SSARS engagements, which will be starting soon.

Compilation and Review Alert for 2012 released by AICPA Read More »

What is an “appropriate salutation” for a compilation report or review report?

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After listening to a Compilation and Review update for 2012 webcast from the AICPA, I’ve changed my mind on what would be an appropriate salutation.

One of the presenters, mentioned that the salutation should not include a personal greeting along the lines of “Dear Board”.  (I won’t identify him because it was his opinion and not an authoritative comment so it is not fair to cite him as an authority.)

I submitted a question to clarify why he thought that. The moderator presented the question. Response was along the lines of the compilation and review reports are still reports and not letters.  As such, it would not be appropriate to include a personal salutation along the lines of “dear directors.”

That represents a substantial change from the approach I have been using for the last year in my reports.  That is also quite different from what I have provided as samples on this blog. …

What is an “appropriate salutation” for a compilation report or review report?Read More »

What is an “appropriate salutation” for a compilation report or review report? Read More »

Webcast for Comp and Review risk alert

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Not much advance notice I realize, but the Compilation and Review Alert – Gearing Up for Busy Season webcast from the AICPA is tomorrow, November 17, from 2 PM until 4 PM Eastern time.

This annual webcast surveys current issues for the upcoming season of compilations and reviews.  Might be worth checking it out.  Cost is $79 for two hours of CPE.

Topics include: …

Webcast for Comp and Review risk alertRead More »

Webcast for Comp and Review risk alert Read More »

Filling up a bucket – word picture for levels of assurance in audit, review, and compilation

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In a webcast on August 31, 2011, Mr. Michael Glynn, CPA, of the AICPA staff, gave a wonderful word picture of the levels of assurance in a review and audit.  Here’s his idea:  Filling up a bucket with procedures produces different levels of assurance.  I would like to expand Mr. Glynn’s description and provide an illustration.

  • In an audit, the accountant provides obtain reasonable assurance that there are no material errors in the financial statements.
  • In a review, the accountant provides obtain limited assurance that there are no material errors in the financial statements.
  • In a compilation,the accountant does not provide obtain any assurance that there are no material errors in the financial statements.

Notice the similarity and difference?  The overlap between these definitions is how much assurance the accountant provides obtains that there are no material errors in the financial statements.

The differences? …

Filling up a bucket – word picture for levels of assurance in audit, review, and compilationRead More »

Filling up a bucket – word picture for levels of assurance in audit, review, and compilation Read More »

Children in school as illustration for management’s responsibility over financial statements – a word picture for SSARS 19

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How can management be response for financial statements and internal control for preparation of the financials when the accountant prepares them?  That is what the second paragraph in the compilation and review report say.  See thumbnail picture of the reports here.  See sample reports here and here.

In a webcast on August 31, 2011, Mr. Michael Glynn, CPA, from the AICPA, gave a fantastic word picture for how management can be responsible for the report and internal control.

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Children in school as illustration for management’s responsibility over financial statements – a word picture for SSARS 19Read More »

Children in school as illustration for management’s responsibility over financial statements – a word picture for SSARS 19 Read More »

Thumbnail description of compilation and review reports

1 Comment / Compilations & reviews /

I listened to a webcast from Michael Glynn, CPA, Senior Technical Manager at the AICPA.  He touched on a number of post-implementation issues from SSARS 19.  His presentation is a variation of the article he wrote for the Cal Society magazine, which I discussed here and here. I will condense and expand on some of his points.

Thumbnail view of compilation report

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Thumbnail description of compilation and review reportsRead More »

Thumbnail description of compilation and review reports Read More »

Two more CPE classes on SSARS are available

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(cross-post from my other blog, Nonprofit Update)

Earlier this year I wrote a CPE course on SSARS requirements for CCH . Back in April I mentioned Compilation and Review: Practice Issues (Third Edition) was available. Discussed that course here.  Two more SSARS classes I wrote are now online.  Another will be available soon.  Each of the following classes are two CPE hours.

Compilation and Review: Introduction.  Course description from CCH:

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Two more CPE classes on SSARS are availableRead More »

Two more CPE classes on SSARS are available Read More »