From Staff Reports
Three new standards the AICPA Accounting and Review Services Committee (ARSC) voted Thursday to propose would help practitioners clearly distinguish between preparation and reporting services.
ARSC voted to expose for public comment proposals titled Preparation of Financial Statements, Compilation Engagements, and Association With Financial Statements. An exposure draft (ED) is expected to be made public by the end of October, and comments will be accepted through May 2, 2014.
The proposed compilation standard was revised after feedback suggested substantial changes from an ED issued last year. The revised standard would apply when the accountant is engaged to perform the service rather than when the accountant prepares and presents the financial statements.
A report would always be required, and the proposed standard would maintain the current requirement to modify the report when the accountant’s independence is impaired.
The new, proposed preparation standard would govern engagements in which the accountant prepares financial statements but does not perform a compilation, review, or audit. The standard would require the accountant to place a legend on each page stating that no assurance is being provided.
The proposed association standard applies when the accountant allows use of his or her name in a report, document, or communication that contains financial statements on which the accountant has not issued an audit, review, or compilation report. In these cases, the financial statements would be required to be marked to indicate that no CPA provides any assurance on the financial statements, or a disclaimer of opinion would be required.
ARSC proposed the association standard because AU Section 504 (which was withdrawn as part of the clarity project) addressed unaudited financial statements. ARSC and the AICPA Auditing Standards Board decided the guidance should be moved from the auditing literature to the Statements on Standards for Accounting and Review Services.