Omission of substantially all disclosures — Compilation reports will change for organizations with fiscal years ending after December 15, 2010. I have prepared a modified report for departure from GAAP. Here is the report I will be using after the first of the year for my non-profit clients if any choose to omit all disclosures. Please feel free to copy, but make sure you modify this based on your firm’s policies.
Update – SSARS 19 had been replaced by SSARS 21. All the reports have been revised. See:
- Flash update on SSARS #21
- Newly approved SSARS will allow a new service, ‘preparation’. Will also require written & signed engagement letters.
- Sample compilation report under SSARS 21
- Sample accountant’s review report for SSARS 21
- Video overview of SSARS 21
- New risk alerts for 2014/2015 are available
Single year report for omission of substantially all disclosures :
Accountant’s Compilation Report
Board of Directors
Dear Board of Directors: (see reason for change on 11-19-11 at this post)
I have compiled the accompanying statement of financial position of Orgname as of December 31, 2010, and the related statements of activity and cash flows for the year then ended. I have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with U.S. generally accepted accounting principles.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared in accordance with U.S. generally accepted accounting principles. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the organization’s assets, liabilities, net assets, revenue, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters.
- Above example has been modified for a nonprofit organization. Modify as needed for a commercial organization.
- Change the singular pronouns (I) to plural pronouns (We) if you are a multi-partner firm. Also change accountant’s to accountants’.
- Original text contains “accounting principles generally accepted in the United States of America” instead of “U.S. generally accepted accounting principles”. The SASs allow the use of the more traditional phrasing of US GAAP. I believe that phrasing makes much more sense for my client base, so have changed the text to the GAAP format. Your firm policy may be different, so revised it (in three different places!) as needed.
- Text that will change for each client is input with intentional misspelling (see orgname, citystate, monthday), so if you forget to change the data, a spell check will remind you.
Update: I have written a 3-hour online CPE course called Compilation and Review: Practice Issues (Third Edition) available at the CCH Learning Center website. From the course description:
This course was prepared to enable participants who are experienced accountants to improve their knowledge of the issues affecting their compilation and review practices.
Course discussed in more detail at this post.