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AICPA Looks to Amend Standard on Reviews of Financial Statements

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Jul 14th 2016
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The Accounting and Review Services Committee of the American Institute of CPAs (AICPA) has proposed an amendment to its standard on reviews of financial statements.

The proposal to Statement on Standards for Accounting and Review Services (SSARS) No. 21 would amend paragraphs .05 and .80-.82 of AR-C Section 90, Review of Financial Statements, and applicable paragraphs that relate to the reporting on supplementary information for reviewed financial statements and accountants’ reports on them.

Comments are due by Sept. 2 and should be submitted to Mike Glynn at [email protected].

The proposal is considered a technical correction of AR-C Section 90, and no other SSARS changes are proposed. The proposal revises paragraphs .05, .81 to .82, and .A128 to .A131, and adds paragraphs .A10 to .A11. The changes are intended to clarify how “supplementary information” is defined and to revise accountants’ reporting duties when that information is included with reviewed financial statements and accountants’ review reports.

Here’s a sampling of the changes, which are in italics.

Paragraph .05 defines “supplementary information” as information presented outside the basic financial statements, excluding required supplementary information, that is not considered necessary for the financial statements to be fairly presented in accordance with the applicable financial reporting framework. Such information may be presented in a document containing the reviewed financial statements or separate from the reviewed financial statements.

Paragraph .81 is amended to read: When the accountant has subjected the supplementary information to the review procedures applied in the accountant’s review of the basic financial statements, the other-matter paragraph in the accountant’s review report on the financial statements or the separate report on the supplementary information should state that.

Paragraph .82 is amended to read: When the accountant has not subjected the supplementary information to the review procedures applied in the accountant’s review of the basic financial statements, the other-matter paragraph in the accountant’s review report on the financial statements or the separate report on the supplementary information should state that.

Paragraph .A10 is added to state: Supplementary information includes additional details or explanations of items in or related to the basic financial statements, consolidating information, historical summaries of items extracted from the basic financial statements, statistical data, and other material, some of which may be from sources outside the accounting system or outside the entity.

Paragraph .A11 is added to state: Supplementary information may be prepared in accordance with an applicable financial reporting framework, by regulatory or contractual requirements, in accordance with management’s criteria, or in accordance with other requirements.

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