AICPA Issues New SSARS Interpretation on Reviewsby
The American Institute of CPAs (AICPA) recently issued a new interpretation of AR-C Section 90, Review of Financial Statements, under the AICPA’s Statements on Standards for Accounting and Review Services (SSARS).
The section mandates that the written review report includes a statement that the accountant is responsible for conducting a review engagement in accordance with SSARS, put forth by the AICPA Accounting and Review Services Committee.
But the interpretation indicates that an accountant also can state that the review was done according to another set of review standards, such as International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements, provided that the review was done in complete compliance with both standards.
The AICPA’s interpretation also includes the following sample report for a review done according to SSARS and ISRE 2400:
I (We) have reviewed the accompanying financial statements of XYZ Company, which comprise the balance sheets as of December 31, 20X2 and 20X1, and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.
Management’s Responsibility for the Financial Statements
Management (Owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error.
My (our) responsibility is to conduct the review engagements in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants and in accordance with International Standard on Review Engagements 2400 (Revised) issued by the International Auditing and Assurance Standards Board. Those standards require me (us) to perform procedures to obtain limited assurance as a basis for reporting whether I am (we are) aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) conclusion.
Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.
[Signature of accounting firm, or accountant, as appropriate]
[Accountant’s city and state]
[Date of the accountant’s review report]
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.