1. Insert Your Firm’s Logo Here
Exploring SSARS 21: A Look at Preparation, Compilation and Review Services
An Overview of the Changes and Impacts for Our Clients and Our Practice

2. Instructions To Firms
Below are some suggestions when using this PowerPoint to update your team members on SSARS 21.
This PowerPoint is an overview of significant changes to compilation and review engagements and an introduction to the preparation service. It should be used to augment your understanding of SSARS 21. Reviewing this is not a substitute for reading and understanding the actual guidance.
Several slides have a comment note for you to consider the application based on your current practices (and consider incorporating relevant examples), and there are likely others throughout the PowerPoint
Once you have tailored this PowerPoint to your firm’s current practices, delete this slide

3. Objective To provide an overview of changes resulting from SSARS 21
Effective Dates
AR-C 70 - Preparation
AR-C 80 - Compilation
AR-C 90 - Review

4. General Overview of SSARS 21

5. SSARS 21
Supersedes all existing AR sections except for AR Section 120, Compilation of Pro Forma Financial Information
Prospective financial information is currently codified in Attest Standards

6. General Overview of SSARS 21
SSARS No. 21 is formatted into four separate sections:
Section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services
Section 70, Preparation of Financial Statements
Section 80, Compilation Engagements
Section 90, Review of Financial Statements
These sections have been codified with the prefix “AR- C” to denote them from the extant AR sections.

7. Effective Date
Effective for financial statement periods ending on or after December 31, 2015
Early implementation is permitted
Interim engagements can be performed in accordance with SSARS 21 or SSARS 19
SSARS No. 21 is effective for periods ending on or after December 15th, Early implementation is permitted. Interim period engagements during 2015 may be performed in accordance with SSARS No. 21 or SSARS No. 19.

8. Section 60 – General Principles

9. Section 60 – General principles for SSARS Engagements
Replaces AR Section 60, Framework for Performing and Reporting on Compilation and Review Engagements
Comply with the general principles in Section 60 in addition to the relevant sections based on whether the engagement is a preparation, compilation or review
Not expected to result in changes to existing practice
AR-C Section 60 of SSARS No. 21 replaces AR Section 60, Framework for Performing and Reporting on Compilation and Review Engagements. It provides general principles for engagements performed in accordance with SSARSs.
These general principles have also been updated to incorporate a new service, an engagement to prepare financial statements, and to differentiate this service from a compilation engagement.
AR-C Section 60 is not expected to result in changes to existing practice.

10. Section 60 – General principles for SSARS Engagements
AR-C Section 60 includes requirements with guidance on:
Ethical requirements
Professional judgment
Conduct of the engagement
Engagement level quality control
Acceptance and continuance of client relationships and engagements
Note to firms: Additional details about each of these requirements is included in the speaker notes. Firms may choose to add these details as additional slides
AR-C Section 60 of SSARS No. 21 replaces AR Section 60, Framework for Performing and Reporting on Compilation and Review Engagements. It provides general principles for engagements performed in accordance with SSARSs.
These general principles have also been updated to incorporate a new service, an engagement to prepare financial statements, and to differentiate this service from a compilation engagement.
AR-C Section 60 is not expected to result in changes to existing practice.
AR-C Section 60 includes requirements with guidance on:
Ethical requirements
Due Care
Integrity
Objectivity
Independence
Professional judgment
Need training, knowledge and experience
Competence
Understanding of entity
Supported by facts and circumstances of the engagement
Conduct of the engagement
“Must” means must
“Should” is presumptively mandatory and means required unless you have a really good reason not to do (need to document why not done)
Engagement level quality control
[document location of firm’s quality control document]
Acceptance and continuance of client engagements
[document firms acceptance and continuance policies]

11. Section 70 – Financial Statement Preparation

12. Section 70 – Overview
New non-attest financial statement preparation service
Bright line between accounting services (preparation) and reporting services (compilation or review)
Financial statements may be provided to third parties
The accountant no longer has to be concerned about whether the financial statements will be used by third parties, which was a concern under the prior SSARS 8 “management use only” reporting option.
Determining whether the financial statements have been prepared by the accountant can be difficult in certain situations. For example, cloud computing and other applications have made it difficult to determine who (or what) has prepared the financial statements. Was it the accountant, management or the computer application?
With Section 70 firms no longer have to be as concerned about who “pushes the button” to print financials. What you’ve been engaged to do determines what service you’re providing.

13. Section 70 – Overview
Applies when engaged to prepare financial statements but not engaged to perform an audit, review, or compilation on those financial statements.
Does not apply when
engaged to merely assist in preparing financial statements
the financial statements are prepared as a by-product of another engagement
The understanding with the client as to what the engagement entails is important.
Prior to SSARS No. 21, “submission” of financial statements to the client or to third parties was the trigger for the compilation service.
SSARS No. 21 eliminates the submission requirement so the compilation literature applies when the accountant is engaged to perform a compilation. This means the compilation determination is driven by what the firm is engaged to do rather than whether you’re submitting the financial statements.
Note: a single engagement will fall under only one section of SSARS 21. Therefore an engagement won’t be a preparation engagement under AR-C 70 and also fall under AR-C 80 or 90. For example, if the firm is preparing financial statements that it will then issue a compilation report on, the engagement falls under AR-C 80.
Apply professional judgment as to when the accountant is engaged to prepare financial statements.

14. Section 70 – Overview Examples of when AR-C 70 may apply
Preparation of financial statements prior to audit or review by another accountant
Preparation of financial statements to be presented alongside the tax return
Preparation of personal financial statements for presentation alongside a financial plan
Preparation of a single financial statement
Using the information in a general ledger to prepare financial statements outside of an accounting software system

15. Section 70 – Overview Examples of when AR-C 70 does not apply
Preparation of financial statements when the accountant is engaged to perform an audit, review, or compilation of such financial statements
Preparation of financial statements with a tax return solely for submission to taxing authorities
Personal financial statements that are prepared for inclusion in written personal financial plans prepared by the accountant
Financial statements prepared in conjunction with litigation services that involve pending or potential legal or regulatory proceedings

16. Section 70 – Planning
An engagement letter signed by both the accountant and management or those charged with governance is required
Note to Firms: Add reference to location of preparation engagement letters for SSARS 21
No determination about independence is required
The firm may want to maintain independence in case attest services are requested in future
Note to Firms: Add reference to location of independence policies or person to whom questions should be directed
Identify clients who may be interested in engaging us to perform preparation engagements.
SSARS 8 engagements
Accounting assistance
Technology, including cloud computing, provides us the opportunity to help clients on a more collaborative basis when it comes to generating financial statements. By offering preparation as a service, we can formalize the accounting assistance being provided.
Discuss the client’s specific needs early in the planning process.
Does the client expect financial statements to be prepared as part of the engagement?
If clients are currently receiving a compilation report with their financial statements, they may want to continue to receive a report.
Identify existing clients that may be interested in preparation services, including clients for whom you’re already providing accounting assistance or who are receiving management use only financial statements.

17. Section 70 – Fieldwork
Obtain an understanding of the financial reporting framework and significant accounting policies
Discuss significant estimates and judgments with clients
Client needs to understand
Client needs to accept responsibility
Prepare the statements using the records and explanations provided by management
Not required to verify the completeness or accuracy of information

18. Section 70 – Financial Statements
Financial statements can be prepared with or without disclosures
Disclose that substantially all disclosures are omitted
If using a special purpose framework include a description
Financial statements can be prepared with a known departure but must be disclosed
Financial statements can be prepared with or without disclosures. Disclose the omission on the face of, or in a note to, the financial statements.
When a special purpose framework (i.e., a financial reporting framework other than GAAP or IFRS) is used, include a description of the financial reporting framework:
On the face of the financial statements, usually placed next to or under the title of the financial statements;
Or in a note to the financial statements.
Financial statements can be prepared with a known departure from the financial reporting framework. The departure must be disclosed on the face of, or in a note to, the financial statements.

19. Section 70 – Legend/Disclaimer
No report is required, even if the financial statements are expected to be used by a third party
A legend is required on each page of the financial statements indicating, at a minimum, “no assurance is provided.” Examples:
No assurance is provided on these financial statements.
These financial statements have not been subjected to an audit, review, or compilation engagement, and no assurance is provided on them.  
Other statements that convey that no assurance is provided on the financial statements are acceptable.
Note to firm: see speaker notes for additional considerations.
The legend can be shown as headers or footers.
Note to firm presenter:
Once your firm has decided the language you want to use, communicate that to firm personnel. Some software vendors will be building the legend into their software. Additionally, the location of the legend may vary based on the software vendor. For example, one vendor may automatically put the legend as a footer and another may show it as a header.
Determine your firm’s policy regarding the language and location of the disclaimer and communicate to staff.

20. Section 70 – Legend/Disclaimer
The accountant or the accountant’s firm name is not required to be included, although it can be.
Note to Firms: Document firm policy if name will or will not be included
Options if the legend is not included:
Issue a disclaimer
Perform a compilation engagement; or
Resign.
Note to Firms: Document which option the firm will pursue if a legend is not included
Keep a copy of the statements in the workfiles
Following is an example of a disclaimer that the accountant may issue when the accountant is unable to include the required legend on each page of the financial statements:
The accompanying financial statements of ABC Company as of and for the year ended December 31, 20XX, were not subjected to an audit, review, or compilation engagement by me (us) and accordingly, I (we) do not express an opinion, a conclusion, nor provide any assurance on them.
[Signature of accounting firm or accountant, as appropriate]
[Accountant’s city and state]
[Date]

21. Peer Review Requirements
Note to firms: determine whether you wish to review peer review requirements in your training session.
Firms that only perform preparation engagements are not required to enroll in AICPA PRP
A firm’s preparation engagements are included in the scope of a peer review when the firm either elects to enroll in the program or is already enrolled due to other engagements it performs
Changes are effective for peer reviews commencing on or after February 1, 2015

22. Section 80 – Compilation Engagements

23. Section 80 – Overview of Changes
Applies when the accountant is engaged to perform a compilation engagement
Some changes to the engagement letter
A report is always required
Independence is a required consideration
Management use only financial statements (SSARS 8 engagements) are no longer an option.
AR-C Section 80 of SSARS No. 21 modifies when a compilation report is required. Prior to SSARS No. 21, AR Section 80 applied when an accountant was engaged to report on compiled financial statements or when the financial statements were submitted (defined as “prepared and presented”) to a client or to third parties.
SSARS No. 21 eliminates the submission requirement and the compilation literature only applies when the accountant is engaged to perform a compilation service.
The accountant no longer has to be concerned about whether the financial statements will be used by management or third parties as was the case with SSARS 8 engagements under the extant standards.
For our SSARS 8 clients, you’ll need to discuss with the client whether they would prefer us to perform preparation services under AR-C 70 or a compilation with a report under AR-C 80.

24. Section 80 – Planning Requires an updated engagement letter
Signature by both the accountant and the client is required.
Note to Firms: Document location of engagement letters updated for SSARS 21
One change to engagement letter is that management’s responsibilities are clarified
Clients may be concerned that management’s responsibilities have changed, but they have not.
Talking points available to help frame the conversation
Changes to engagement letter include:
Management’s responsibilities are clarified
Language is added regarding the form and content of the compilation report expected to be issued
A statement is added that management agrees to include the compilation report in any document containing the related financial statements and will ask the accountant’s permission to do so
Considerations with respect to financial statements prepared using a special purpose framework

25. Section 80 – Fieldwork
No changes to procedures

26. Section 80 – Financial Statements
Supplementary information references, such as “See accountant’s compilation report” or “See independent accountant’s compilation report.” are allowed, but no longer required.
Note to Firms: Document firm’s policy regarding if the reference will be used and communicate in training
Statements can be prepared with or without disclosures

27. Section 80 – Reporting A report is always required
Management use only financial statements (SSARS 8 engagements) are no longer an option.
Preparation engagement under AR-C 70 is an option
Or keep as compilation but with a report
Note to firms: Document process for communicating with clients currently receiving SSARS 8 financial statements and discussing impact with them
Streamlined report
The city and state where the accountant practices is now required
A report is always required for compilation engagements.
The non-reporting management use only financial statements (SSARS 8 engagements) is no longer an option. Those engagements are now covered by AR-C Section 70. Or continue as a compilation but with a report
The report is streamlined to differentiate the non-assurance compilation report from assurance (review and audit) reports
The standard report is just one paragraph with no headings.
The report title and addressee have been removed.
The city and state where the accountant practices is now required in the report. Firm letterhead with the city and state of the issuing office meets this requirement.
Additional paragraphs should be added to the report in certain situations (see Exhibit 5).

28. Section 90 – Review Engagements

29. Section 90 – Overview of Changes
Some changes to the engagement letter
Some changes to the management representation letter
Some changes to fieldwork requirements
Review report has been updated

30. Section 90 – Planning Updated engagement letter
Signatures by both the accountant and the client are required.
Management’s responsibilities are clarified.
Language added regarding the form and content of the review report expected to be issued.
Statement added that management agrees to
Include the review report in any document containing the related financial statements
Ask the accountant’s permission to do so
Considerations with respect to using a special purpose framework
Note to Firms: Document location of engagement letters updated for SSARS 21

31. Section 90 - Fieldwork
Requirements regarding the performance of analytical procedures have been clarified.
Note to Firms: Add reference to updated policies for performing analytical procedures in a review engagement
Inquiries are now presumptively required.
Reconciling the financial statements to underlying accounting records is now specifically required.
Management representation letter guidance is clarified.
SSARS 21 added additional requirements concerning performing analytical procedures in a review engagement. The follow is from Paragraph 19 of Section 90 of SSARS 21:
.19 
The accountant should apply analytical procedures to the financial statements to identify and provide a basis for inquiry about the relationships and individual items that appear to be unusual and that may indicate a material misstatement. Such analytical procedures should include the following: (Ref: par. .A32–.A34)
a.    Comparing the financial statements with comparable information for the prior period, giving consideration to knowledge about changes in the entity’s business and specific transactions
b.    Considering plausible relationships among both financial and, when relevant, nonfinancial information (Ref: par. .A35)
c.    Comparing recorded amounts or ratios developed from recorded amounts to expectations developed by the accountant through identifying and using relationships that are reasonably expected to exist, based on the accountant’s understanding of the entity and the industry in which the entity operates (Ref: par. .A36)
d.    Comparing disaggregated revenue data, as applicable (Ref: par. .A37)

32. Section 90 – Financial Statements
Supplementary information references, such as “See independent accountant’s review report.” is allowed, but no longer required.
Note to Firms: Document the firm’s policy for including references to supplemental information
The concept of required supplementary information is introduced 
Defined as information that an accounting standard requires to accompany an entity’s basic financial statements
Examples of Required Supplementary Information include:
With respect to common interest realty associations, estimates of current or future costs of major repairs and replacements of common property that will be required in the future as required by FASB
Management’s discussion and analysis and budgetary comparison statements as required by GASB

33. Section 90 – Reporting
Updated report with heading and city and state of accountant’s practice location
Modification to the standard report in certain situations
Additional requirements for Emphasis of Matter or Other Matter paragraphs
Expanded communications with management or those charged with governance
The standard report remains primarily unchanged, except
Headings have been added throughout.
The city and state where the accountant practices is now required in the report. Firm letterhead with city and state of the issuing office meets this requirement.
Modification to the standard report is required in certain situations
Special purpose framework (i.e., a financial reporting framework other than GAAP or IFRS, prepared using a basis of accounting that is cash, tax, regulatory, contractual or other)
Interim financial statements
Known departure from applicable financial reporting framework
Restricted use
Consideration of entity’s ability to continue as a going concern
Supplementary information accompanies the financial statements
Required supplementary information accompanies the financial statements
Comparative financial statements are presented, and there is a changed reference to a departure from the applicable reporting framework
Comparative financial statements are presented, and the prior period was audited
Reference to the work of other accountants
Subsequent events and subsequently discovered facts
Emphasis of Matter or Other Matter Paragraph is included in a Review Report
An emphasis-of-matter paragraph must be added to the report when financial statements are prepared in accordance with a special purpose framework (i.e., a financial reporting framework other than GAAP or IFRS, prepared using a basis of accounting that is cash, tax, regulatory, contractual or other).
The accountant should communicate with management regarding the expectation to include the paragraph(s) and the proposed wording. These communications must be documented in the review file.
Communications with management or those charged with governance are expanded to include matters that are of significant importance to merit the attention of those parties, in the accountant’s professional judgment.

34. Financial Statement Users

35. Financial Statement Users
Start communicating with users about the new report formats for compilations and reviews.
Provide examples of standard reports
Users may be concerned that they are receiving something different.
Reports have been modified but there is no change to the level of service or assurance previously provided.

36. Next Steps

37. Implementing The New Standards
We will begin implementing SSARS 21 during the planning stage of year end engagements.
Start communicating management's responsibilities and changes to compilation and review reports during our planning meetings
Note to firms: Update these bullets with specific instructions you wish to give to your staff
Additional materials and documentation provided by the AICPA at AICPA.org/SSARS21

38. Reminders Obtain signed updated engagement letters
Ensure you’re using the updated reports for compilations and reviews
Ensure you’re using the updated management letters for reviews
Talk to SSARS 8 engagements clients now to determine level of engagement

39.   
Questions?