Are engagement letters required for compilations?
The requirement that the accountant modify the accountant’s compilation report whenever the accountant’s independence is impaired is retained. The accountant is required to obtain an engagement letter signed by both the accountant and the client’s management.
Are compilations attest engagements?
Compilations. The third type of attestation services a CPA may provide is a compilation. In a compilation, the CPA compiles the books and records of a client without any performance of substantive procedures, verification or confirmation of balances.
What is required in a compilation engagement?
When performing compilation, the accountant should prepare adequate documentation that provides information on the work that has been carried out. Some of the documentation includes the engagement letter, financial statements, and communication with management regarding significant issues identified during the audit.
What is a Ssars engagement?
Statement on Standards for Accounting and Review (SSARS) No. 21 represents the efforts of the AICPA’s Accounting and Review Services Committee (ARSC) to clarify and revise the existing standards for reviews, compilations, and engagements to prepare financial statements as a result of ARSC Clarity Project.
Do you need an engagement letter for a review?
You should perform a review engagement when engaged to do so. If your client asks for this service and you accept, you are engaged. A review engagement letter should be prepared and signed by the accountant or the accountant’s firm and management or those charged with governance.
Do you have to be independent to perform a compilation?
While independence is required at the other levels of service, the CPA does not have to be independent of your organization to perform a compilation. The report must state that the accountant is not independent.
Is a compilation a Nonattest service?
When the accountant prepares financial statements and performs a related compilation, the creation of the financial statements is a nonattest service with no particular guidance–not even from SSARS 21. (Of course, the AICPA Code of Professional Conduct applies to all services.)
What is a compilation letter?
A compilation refers to a company’s financial statements that have been prepared or compiled by an outside accountant. A compilation is usually part of an accounting firm’s write-up service.
How do I write a compilation report?
The compilation report should:
- Include a statement that management (owners) is (are) responsible for the financial statements.
- Identify the financial statements.
- Identify the entity.
- Specify the date or period covered.
- Include a statement that the compilation was performed in accordance with SSARS.
What is the effective date for Ssars 25?
December 15, 2021
The effective date for SSARS 25 is for periods ending on or after December 15, 2021. Early implementation is permitted.