When does Section 70 of SSARS No. 21 apply?


Section 70, Preparation of Financial Statements, of Statement on Standards for Accounting and Review Services No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification, applies when an accountant in public practice is engaged to prepare financial statements.

The following table provides examples of services that the accountant may be engaged to perform and whether Section 70 would apply. The table is not intended to be all-inclusive, and professional judgment should be applied in determining whether the accountant was engaged to prepare financial statements.

Services to Which Section 70 AppliesServices to Which Section 70 Does Not Apply
Preparation of financial statements prior to audit or review by another accountantPreparation of financial statements when the accountant is engaged to perform an audit, review, or compilation of such financial statements
Preparation of financial statements that are not expected to be used by a third party (management-use-only financial statements)
Financial statements prepared 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
Financial statements prepared in conjunction with business valuation services
Maintaining depreciation schedules
Preparing or proposing certain adjustments, such as those applicable to deferred income taxes, depreciation, or leases
Preparation of a single financial statement, such as a balance sheet or financial statements with substantially all disclosures omittedDrafting financial statement notes
Using the information in a general ledger to prepare financial statements outside of an accounting software systemEntering general ledger transactions or processing payments (general bookkeeping) in an accounting software system

Source: Michael P. Glynn, CPA, CGMA.

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