ssars 21 training powerpoint template

21 is formatted into four separate sections: • Section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services • S

Exploring SSARS 21: A Look at

Preparation, Compilation and

Review Services

An Overview of the Changes and Impacts for

Our Clients and Our Practice

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Instructions To Firms

Below are some suggestions when using this

PowerPoint to update your team members on SSARS 21.

• This PowerPoint is an overview of significant changes to

compilation and review engagements and an introduction to the preparation service It should be used to augment your

understanding of SSARS 21 Reviewing this is not a substitute for reading and understanding the actual guidance.

• Several slides have a comment note for you to consider the

application based on your current practices (and consider

incorporating relevant examples), and there are likely others

throughout the PowerPoint

Once you have tailored this PowerPoint to your firm’s current practices, delete this slide

General Overview of

SSARS 21

SSARS 21

Supersedes all existing AR sections except for AR

Section 120, Compilation of Pro Forma Financial

Information

• Prospective financial information is currently codified in Attest Standards

General Overview of SSARS 21

SSARS No 21 is formatted into four separate

sections:

• Section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services

• Section 70, Preparation of Financial Statements

• Section 80, Compilation Engagements

• Section 90, Review of Financial Statements

These sections have been codified with the prefix

“AR- C” to denote them from the extant AR

sections.

Effective Date

Effective for financial statement periods ending on

or after December 31, 2015

Early implementation is permitted

Interim engagements can be performed in

accordance with SSARS 21 or SSARS 19

Section 60 – General

Principles

Section 60 – General principles for SSARS

review

Not expected to result in changes to existing

practice

Section 60 – General principles for SSARS

Engagements

AR-C Section 60 includes requirements with guidance on:

• Ethical requirements

• Professional judgment

• Conduct of the engagement

• Engagement level quality control

• Acceptance and continuance of client relationships and engagements

• Note to firms: Additional details about each of these

requirements is included in the speaker notes Firms may choose to add these details as additional slides

Section 70 – Financial

Statement Preparation

New non-attest financial

Financial statements may be

provided to third parties

Section 70 – Overview

Section 70 – Overview

Applies when engaged to prepare financial

statements but not engaged to perform an audit,

review, or compilation on those financial

statements.

Does not apply when

• engaged to merely assist in preparing financial statements

• the financial statements are prepared as a by-product of another engagement

The understanding with the client as to what the

engagement entails is important.

Section 70 – Overview

Examples of when AR-C 70 may apply

• Preparation of financial statements prior to audit or review by another accountant

• Preparation of financial statements to be presented alongside the tax return

• Preparation of personal financial statements for presentation alongside a financial plan

• Preparation of a single financial statement

• Using the information in a general ledger to prepare financial statements outside of an accounting software system

Section 70 – Overview

Examples of when AR-C 70 does not apply

• Preparation of financial statements when the accountant is

engaged to perform an audit, review, or compilation of such

financial statements

• Preparation of financial statements with a tax return solely for submission to taxing authorities

• Personal financial statements that are prepared for inclusion

in written personal financial plans prepared by the accountant

• Financial statements prepared in conjunction with litigation

services that involve pending or

potential legal or regulatory proceedings

Section 70 – Planning

An engagement letter signed by both the accountant and management or those charged with governance

is required

• Note to Firms: Add reference to location of preparation

engagement letters for SSARS 21

No determination about independence is required

• The firm may want to maintain independence in case attest

services are requested in future

• Note to Firms: Add reference to location of independence

policies or person to whom questions should be directed

Identify clients who may be interested in engaging

us to perform preparation engagements.

• SSARS 8 engagements

Obtain an understanding of the financial

reporting framework and significant

accounting policies

Discuss significant estimates and judgments

with clients

• Client needs to understand

• Client needs to accept responsibility

Prepare the statements using the records

and explanations provided by management

• Not required to verify the completeness or accuracy of

Section 70 – Fieldwork

Section 70 – Financial Statements

Financial statements can be prepared with or

without disclosures

• Disclose that substantially all disclosures are omitted

If using a special purpose framework include a

description

Financial statements can be prepared with a known departure but must be disclosed

Section 70 – Legend/Disclaimer

No report is required, even if the financial

statements are expected to be used by a third party

A legend is required on each page of the financial statements indicating, at a minimum, “no assurance

is provided.” Examples:

• No assurance is provided on these financial statements

• These financial statements have not been subjected to an audit, review, or compilation engagement, and no assurance is

• Note to Firms: Document which option the firm will pursue

if a legend is not included

Keep a copy of the statements in the workfiles

Peer Review Requirements

Note to firms: determine whether you wish to review peer review requirements in your training session.

Firms that only perform preparation engagements are not required to enroll in AICPA PRP

A firm’s preparation engagements are included in the scope of a peer review when the firm either elects to enroll in the program or is already enrolled due to

other engagements it performs

Changes are effective for peer reviews commencing

Section 80 – Compilation

Engagements

Section 80 – Overview of Changes

Applies when the accountant is engaged to perform a

compilation engagement

Some changes to the engagement letter

A report is always required

Independence is a required consideration

Management use only financial statements (SSARS 8

engagements) are no longer an option

Section 80 – Planning

Requires an updated engagement letter

• Signature by both the accountant and the client is required.

• Note to Firms: Document location of engagement letters

updated for SSARS 21

One change to engagement letter is that

management’s responsibilities are clarified

• Clients may be concerned that management’s responsibilities

have changed, but they have not

• Talking points available to help frame the conversation

Section 80 – Fieldwork

No changes to procedures

Section 80 – Financial Statements

Supplementary information references, such as

“See accountant’s compilation report” or “See

independent accountant’s compilation report.” are

allowed, but no longer required.

• Note to Firms: Document firm’s policy regarding if the

reference will be used and communicate in training

Statements can be prepared with or without

disclosures

Section 80 – Reporting

A report is always required

Management use only financial statements (SSARS 8 engagements) are no longer an option

• Preparation engagement under AR-C 70 is an option

• Or keep as compilation but with a report

• Note to firms: Document process for communicating with clients

currently receiving SSARS 8 financial statements and discussing impact with them

Streamlined report

The city and state where the accountant practices is

Section 90 – Review

Engagements

Section 90 – Overview of Changes

Some changes to the engagement letter

Some changes to the management representation letter

Some changes to fieldwork requirements

Review report has been updated

Section 90 – Planning

Updated engagement letter

• Signatures by both the accountant and the client are required.

• Management’s responsibilities are clarified.

• Language added regarding the form and content of the review report expected to be issued.

• Statement added that management agrees to

- Include the review report in any document containing the related financial statements

- Ask the accountant’s permission to do so

• Considerations with respect to using a special purpose

framework

• Note to Firms: Document location of engagement letters

updated for SSARS 21

Section 90 - Fieldwork

Requirements regarding the performance of

analytical procedures have been clarified

• Note to Firms: Add reference to updated policies for

performing analytical procedures in a review engagement

Inquiries are now presumptively required.

Reconciling the financial statements to underlying accounting records is now specifically required.

Management representation letter guidance is

clarified.

Section 90 – Financial Statements

Supplementary information references, such as

“See independent accountant’s review report.” is

allowed, but no longer required

• Note to Firms: Document the firm’s policy for including

references to supplemental information

The concept of required supplementary information

is introduced

• Defined as information that an accounting standard requires to accompany an entity’s basic financial statements

Section 90 – Reporting

Updated report with heading and city and

state of accountant’s practice location

Modification to the standard report in certain

situations

Additional requirements for Emphasis of

Matter or Other Matter paragraphs

Expanded communications with management

or those charged with governance

Financial Statement

Users

Start communicating with users

about the new report formats for

compilations and reviews.

• Provide examples of standard reports

Users may be concerned that they

are receiving something different

• Reports have been modified but there is

no change to the level of service or

assurance previously provided

Financial Statement Users

Next Steps

Implementing The New Standards

We will begin implementing SSARS 21 during the planning stage of year end

engagements.

• Start communicating management's

responsibilities and changes to compilation and review reports during our planning

meetings

• Note to firms: Update these bullets with

specific instructions you wish to give to your staff

Additional materials and documentation

provided by the AICPA at AICPA.org/SSARS21

Obtain signed updated engagement letters

Ensure you’re using the updated reports for

compilations and reviews

Ensure you’re using the updated management

letters for reviews

Talk to SSARS 8 engagements clients now to

determine level of engagement

Questions?