Thomson Reuters Checkpoint Issues Special Report on SSARS 21by
A special report released on July 30 by Thomson Reuters Checkpoint focuses on significant changes to the Statements on Standards for Accounting and Review Services (SSARS) 21 to help CPAs avoid potential pitfalls and noncompliance when the new guidance takes effect on Dec. 15.
The report, The Potential Pitfalls of SSARS 21, highlights and provides detailed analyses of some of the major revisions affecting the standards for practitioners who prepare financial statements for their clients. It focuses on the significant review changes, responsibilities, and differences between engagements, and actual preparation services provided by AR-C Section 70, AR-C Section 80, and AR-C Section 90. The report also looks at the new formatting and content requirements of a standard compilation report under the new standards.
âNot only does SSARS 21 add a new [financial statement preparation] service and significantly change requirements and procedures for other SSARS engagements, it also changes the content of engagement letters, reports, and management representation letters,â Laura Billingsley, senior technical editor of accounting and auditing with the Tax & Accounting business of Thomson Reuters, said in a written statement. âBecause SSARS 21 introduces such substantive changes, guidance and training are imperative.â
Practitioner awareness of the new standard, as well as the financial statement preparation service introduced by the standard, has increased significantly since last year. In a survey of Thomson Reuters customers during the second quarter of 2015, 85 percent said they were familiar with the new standard and its provision of a financial statement preparation service, compared to only 35 percent of customers surveyed during the second quarter of 2014.
However, many practitioners are still not aware of the significant changes that SSARS 21 makes to compilation and review engagements or the specific requirements necessary to provide the new financial statement preparation service.
âThe requirement in the new preparation service related to financial statement departures is especially important for firms considering this new service,â said Kimberly Fransen, an executive editor with the Tax & Accounting business of Thomson Reuters. âMany firms may not realize that moving to a legend rather than a report does not alleviate their responsibility to communicate significant departures noted in the financial statements.â
AR-C Section 70, Preparation of Financial Statements, is applicable when the accountant is not in public practice. This section does not require a report, even when the financial statements are expected to be used or provided to a third party. Section 70 requires either a legend on each page of the financial statements stating that no assurance is being provided or a disclaimer, according to a Thomson Reuters Checkpoint newsletter.