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SSARS No. 8 Amending SSARS No. 1 Issued.

The Accounting and Review Services Committee has issued Statement on Standards for Accounting and Review Services No. 8, Amendment to Statement on Standards for Accounting and Review Services No. 1, Compilation and Review of Financial Statements (No. 060661 CPA 12).

SSARS No. 8 will make fundamental changes to the way in which accountants view the compilation engagement. It creates new options for accountants when performing compilation engagements in which the financial statements are not expected to be used by a third party, and also allows the accountant to use his or her professional judgment in dealing with the client. Some of the major changes are:

* Revising the definition of submission. By modifying the definition of submission, the majority of the applicability problems that the profession is facing would be solved. Under SSARS No. 8, submission of financial statements is defined as "presenting to a client or third parties financial statements that the accountant has prepared either manually or through the use of computer software." Although practitioners will still have to use their professional judgment to determine if they have prepared and presented a financial statement, this modification was the best way to address today's technological environment, while still maintaining a minimum level of service.

* Under SSARS No. 8, if an accountant submits financial statements to a client that are not expected to be used by a third party, the following communication options are available:

-- Issuing a compilation report in accordance with reporting requirements of SSARS No. 1.

-- Documenting an understanding with the entity through the use of an engagement letter, preferably signed by management, regarding the services to be performed and the limitations on the use of those financial statements. The committee believes that by offering these communication options when performing a compilation, the accountant will use his or her professional judgment about the type of communication options appropriate for the client, provide a quality service and respond to the needs of clients.

SSARS No. 8 is effective for financial statements submitted after Dec. 31, 2000. To obtain a copy, contact the Member Satisfaction Center (see page 6; price: $8.50 member, $10.50 non-member). SSARS No. 8 will also be available for a limited-time free trial period on CPAWeb.org, in the AICPA Professional Literature section, under What's New.
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Title Annotation:Statements on Standards for Accounting and Review Services
Publication:CPA Letter
Article Type:Brief Article
Geographic Code:1USA
Date:Dec 1, 2000
Words:380
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