Jim Ulvog

Reports on comparative financial statements under SSARS 19

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Oops! Looks like I got a little ahead of the professional literature when I drafted samples of comparative review and compilation reports.  SSARS 19 does not explicitly address comparative financials.

What’s the issue?

Update – SSARS 19 had been replaced by SSARS 21. The entire body of knowledge has been revised. See:

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Documentation requirements for a compilation under SSARS 19

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SSARS 19 has specific documentation requirements for compilations and reviews. I will discuss these requirements in a series of posts.

Compilations first. Reviews later.

The overall documentation requirement is that the accountant should prepare documentation in a compilation with sufficient detail to give a clear understanding of the work performed.

Update – SSARS 19 had been replaced by SSARS 21. The entire body of knowledge has been revised. See:

 

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In a peer review, you are graded against your quality control document – don’t set the bar so high you cannot meet it

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CPA firms have a lot of latitude in defining their quality control system.  There are basic components that must be addressed, but firms have the ability to define for themselves how to get there.

One think to keep in mind is that during a peer review your firm’s written quality control document (it has to be written by the way) and SQCS 7 will be the criteria against which your firm will be graded.  The highest standard set by either of those two documents will be your standard.  How could this create a problem for you?

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How to handle engagement quality control reviews in a small firm

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SQCS 7 requires a policy for engagement quality control reviews in all CPA firms.  There is no size cutoff.  However the rules do anticipate great flexibility in establishing the criteria.

It is perfectly appropriate to fine tune the criteria so that a relatively small number of engagements would be selected.  How?

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Quality control system documentation must be written

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One of the changes made by SQCS 7 is that the documentation of the quality control system must be in writing.

Previously the extensive documentation depended on the nature of the firm. In a smaller firm with relatively simple procedures it did not necessarily have to be in writing.  That has changed. You must have something written down.

How to proceed? Three ideas.

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One sentence explanation of the difference between audits and reviews

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(cross posted from www.ulvog.wordpress.com)

I have discussed the differences between audits, reviews, and compilations here and here. Even developed a visual illustration here.  Ask any CPA and you can get a long explanation of the distinctions.

For something shorter, consult this article by Angus Loten in the Wall Street Journal, which said:

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Peering forward – trying to figure out the future

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On my other blog, I have written a series of posts called Peering Forward (okay, okay, that is about all the creativity I can bring to headline writing).  The posts have been combined into one page, which you can see here.  The discussion is from the perspective of ministries, but many of the ideas are useful for CPAs as well.

Two great tidbits to chew on that I mention in the series:

  • Eric Schmidt, the CEO of Google is quoted as saying that every two days we create as much information as all of humanity created from the dawn of civilization through 2003.  (The Kevin Ring article gave the info, TechCrunch verified.)
  • Ray Kurzweil said in 2001 that “we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).”  (comment mentioned in the Ring article.)   His point is that technology change is exponential. 

Why are cartoons such a popular explanation of economics right now?

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(cross-posted from www.ulvog.wordpress.com)

Amity Shlaes, in her current Forbes column, Economics by Cartoon, points out that the cartoon Quantitative Easing Explained and the rap debate between Keynes and Hayek have received 3.5 million and 1.7 million hits on YouTube, respectively.  I’ve mentioned these videos here and here.  (Just checked – the QE cartoon is up to 4.0 million visits.)

Over 5.7 million hits on YouTube video explanations of what is going on?  Why?

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