difference between audit review compilation

Price cut on print books

I’ve dropped the prices for the print copies of my books available at Amazon, Barnes & Noble, and iTunes store.

Here is what you can find on-line:

tragedy-cover

 Tragedy of Fraud – Insider Trading Edition

Story of Scott London’s fall from regional audit partner at KPMG to prison inmate because of his insider trading.

Newly approved SSARS will allow a new service, ‘preparation’. Will also require written & signed engagement letters.

Update – See also:

In August, the Accounting and Review Services Committee approved the clarified SSARS. This rewrites the SSARS into the same clarified format we saw with the audit literature.

The biggest change is the introduction of a new service, called preparation, which will allow a CPA to issue financial statements without providing an accountant’s report or performing procedures on the information.

In highly condensed terms, …

Newest book on differences between audits, reviews, and compilations now available in print and for Nook

Print copy and Nook e-book are in addition to availability for the Kindle and another half-dozen formats.

audit review compilation cover for wordpress croped

The book is an intentionally short read at about 30 pages. The print copy has 20 pages of text.  Focus is to quickly describe the differences between those levels of services using three illustrations:

  • 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 different levels illustrates the differences between the levels of service.

It also explains the differences in plain language. Well, at least using less accountantese than you would usually get from an accountant.

This is a compilation of posts previously appearing on my blogs, with slight editing.

Where can you find the book?

Print book at Amazon here.

Nook e-book at Barnes and Noble here.

Kindle e-book at Amazon here.

Also available here in other formats:

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

Brief summary of proposed changes to compilation rules

A short article in the Journal of Accountancy provides a great summary of the likely changes to SSARS for compilations and ‘preparing’ financial statements. Check out A makeover for compilations by Mike Glynn, CPA. It is a fast read at only 700 words.

Update – See also:

Two of many key points:

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

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.

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

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

Explanation of differences between audits, reviews, and compilations

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

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

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.

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

           

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? …

One sentence explanation of the difference between audits and reviews

(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: