SSARS No. 19--Solving the Documentation Dilemma | AccountingWEB

SSARS No. 19--Solving the Documentation Dilemma

SSARS No. 19 has introduced "enhanced" documentation requirements. At least that's what the ARSC called them!  It seems to me we've been enhancing our documenation since SSARS No. 1 was issued in 1978!  I want to talk about "reduced" documenation requirements because most of us want to make money on compilations and reviews!  Here are some simple ways to reduce documentation, all legal under SSARS No. 19:

Dump your canned practice aids!  I know, I'm in trouble now because we like those things.  We like them because it's hard for us to find time to stay abreast of the standards overload.  We've realized we can't know it all anyway so we just want some forms to use that will get us through peer review.  Just like our approach to audits for decades, we perform every review procedure under the sun so we don't miss anything!  It's called over reviewing or just plain doing too much work. Read SSARS No. 19 once or twice, outline what documentation is required and design a few practice aids and memos that fit your clients.

Compilations and reviews were created on the premise that risk is low.  Basic procedures are required to see if that's true:

  • Compilations--read the financial statements (pretending your didn't prepare them!)
  • Reviews--perform analytical procedures (read the general ledger and compare beginning and ending balances) and make inquiries about variances and unusual matters.

Having done these basic procedures, we don't need to do anything else unless we find "unusual matters."  That's incorrect, incomplete or unsatisfactory information.  When we find such information, we have to determine if adjustments are necessary to prevent the financial statements from being misleading.

So, here's my solution to the documentation dilema on compilations and reviews:

  • Get an annual engagement letter for all client services.
  • Create a spreadsheet template that has places for information about your clients' organization, industry, accounting principles and practices and operations. Prepare the detail once and update it each year for all compilations and reviews.
  • Perform whatever monthly accounting services you've been engaged to do, read the general ledger, propose adjustments, read the final software-embedded statements and send all the related documentation back to the client along with the electronic file. No report or documenation is necessary!
  • For full-disclosure compilations, read the final statements and footnotes (purchase a disclosure cheklist for reference) to make sure they conform to the applicable reporting framework.
  • For reviews, read the general ledger to identify unusual matters and create memos or spreasdheets to document expectations and variances for analytical procedures and selected inquiries and additional procedures performed.
  • Read the final reviewed financials and footnotes (use that purchased disclosure checklist again) and make any necessary additonal inquiries.

This seems pretty simple to me!  Concerned about peer review?  Keep a copy of SSARS No. 19 on your desk and tell the reviewer the list above is in the book!  Starting May 6, I'm presenting four, two-hour webcasts on covering SSARS No. 19 to help you solve this dilema, and to make more money on compilations and reviews.  Come on down!

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by Larry Perry, CPA, CPA Firm Support Services, LLC - Larry has over 40 years experience as a CPA practitioner, author of accounting and auditing manuals, author and presenter of live staff training seminars and author of webcast and self-study CPE programs.  He is co-founder of CPA Firm Support Services, LLC (, an organization providing resources, training and consulting to smaller CPA firms.  Larry writes a weekly blog on focusing on small audits, reviews and compilations.  He is currently developing documentation manuals and handbooks for small audits, reviews and compilations and related electronic practice aids.

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