Highlights of some implementation issues of SSARS 19 discussed by Michael Glynn, CPA, in the August 2011 issue of California CPA magazine. Article is called Life After SSARS No. 19.
A few ideas Mr. Glynn mentions:
If you are doing a review or comp on financial statements for periods before 12-15-10, you need to use the pre-SSARS 19 rules. Mr. Glynn says:
Some CPAs have mistakenly concluded that after Dec. 15, 2010, SSARS No. 19 was the rule of the land, and that they could disregard the pre-SSARS No. 19 literature. Not so fast. SSARS No. 19 is effective for compilations and reviews of financial statements for periods ending on or after Dec. 15, 2010. That means if a CPA is engaged in June 2011 to compile financial statements for the year ended June 30, 2010,the CPA would follow the pre-SSARS No. 19 literature—including the reporting requirements. (emphasis in original)
For example, if you are retained today to review financials for the year ended 6-30-10, you can’t use the SSARS 19 rules.
We will need to keep both sets of rules in our brain for a season of time.
One complication is if you are engaged today to review the financial statements for the years ended 3-31-10 and 3-31-11. In that case, you need to perform the engagement and report under the SSARS 19 rules. Mr. Glynn discusses this scenario in his article.
Option for disclosing reasons for lack of independence in a compilation
Recall that if a CPA is not independent in a compilation, there is an option to disclosure the reasons for impairment.
The CPA can choose on a client-by-client basis, whether to merely say the firm is not independent or to list the reasons for the lack of independence.
However, if any reasons are disclosed, all the reasons must be mentioned. The CPA can’t include some causes of impaired independence and omit others. See his article for a good hypothetical example of why this is needed.
Next post: focusing on the goal of a review and what level of work is needed or can be included.
Check out the full article. It will be well worth your time.