The American Institute of Certified Public Accountants (AICPA) has developed a new guide, Compilation and Review Engagements, for CPAs at smaller firms who perform financial audits.
The guide is designed to help them comply with a new engagement letter requirement.
During the financial audit process, CPAs must obtain an engagement letter from their client that includes the objectives of the audit, the name of the auditor in charge, the projected timeframe, and information the auditor might need the client to supply.
Under the AICPA’s Statements on Standards for Accounting and Review Services No. 19, a formal engagement letter is required. CPAs had previously obtained the letter as a best practice, but under the standard, CPAs are required to obtain a letter from their clients, and the new guide explains how to secure the client letter.
“To help CPAs understand this new process, we included illustrative representation letters, sample review reports, details on client inquiries, and sample case studies,” said Thomas Ratcliffe, Ph.D., the guide’s author.
Ratcliffe developed the guide under the supervision of the Accounting and Review Services Committee, which he chaired from 2006 to 2008. He is director emeritus of the School of Accountancy at Troy University and director of accounting and auditing at the accounting firm Wilson Price. Ratcliffe is a member of the AICPA Auditing Standards Board, which is the senior technical committee designated by the AICPA to issue auditing, attestation, and quality control statements, standards, and guidance to CPAs.
The Compilation and Review Engagements Guide is the latest addition to the AICPA Audit and Accounting Guide Series and is available at www.cpa2biz.com/comp. The cost is $60 for AICPA members, $75 for non-members.