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"The Authority" since 1979!
Updated for new SSARS Literature and the FASB Accounting Standards Codification!
PPC's Guide to Compilation and Review Engagements has been recognized throughout the profession as "the authority" for compilation and review engagements for over 30 years. There's no other source available on the market today that provides the practical, yet authoritative, guidance found in this Guide.
Includes four volumes of in-depth "how to" guidance with hundreds of practice aids, sample reports, sample disclosures, and financial statements.
The streamlined forms and checklists provide you maximum efficiency for complying with professional standards and peer review requirements.
Written by a combination of leading internal and external authors with extensive expertise and decades of practice experience.
The Guide covers the basics of compilation and review services. It also provides in-depth guidance for specific entities and unique engagements, such as governments and nonprofits and Medicare cost reporting. It will help you address almost every situation you might encounter in a review or compilation engagement.
Some of the features of the 2009 Edition of PPC's Guide to Compilation and Review Engagements include-
Recently Issued Compilation and Review Pronouncements. Practice aids and guidance throughout your Guide have been updated for SSARS No. 18, Applicability of Statements on Standards for Accounting and Review Services and Interpretation No. 31, Preparation of Financial Statements for Use by an Entity’s Auditors.
Current Economic Environment. We have added a discussion of the effect of the current economic environment on compilation and review services to assist accountants in performing more effective and efficient engagements.
New SSARS Framework and Reliability Project. We’ve added a discussion of the many changes that will need to be made to compilation and review services as a result of the new Statements on Standards for Accounting and Review Services framework expected to be issued in late 2009.
Recently Issued Accounting Pronouncements. Practice aids and guidance throughout your Guide have been updated for all recently issued pronouncements to make sure you apply the latest guidance in your engagements. In addition, to further assist you in complying with GAAP, we have updated the summary of significant new accounting pronouncements
New Disclosure Checklists. We have completely updated your disclosure checklists (lists of primary disclosure requirements for financial statements of for profit nonpublic entities as required by GAAP) for changes in requirements of the professional standards to help ensure that your clients’ financial statements are accurate and complete
FASB Accounting Standards Codification References. As this edition of the Guide went to press, the FASB had launched its massive Codification project, effective for periods ending after September 15, 2009. The FASB Accounting Standards Codification is designed to present all the authoritative U.S. accounting and financial reporting literature in a single, integrated offering. Users of accounting and financial reporting literature will now have to become familiar with a whole new reference system. To help you with this transition, we have provided a summary of the project and integrated FASB Codification references throughout this Guide
101 SSARS NO. 1--COMPILATION AND REVIEW OF FINANCIAL STATEMENTS
Purpose of SSARS No. 1
Basic Provisions of SSARS No. 1
102 SSARS NO. 2--REPORTING ON COMPARATIVE FINANCIAL STATEMENTS
Scope of SSARS No. 2
Definitions
Basic Provisions of SSARS No. 2
103 SSARS NO. 3--COMPILATION REPORTS ON FINANCIAL STATEMENTS INCLUDED IN CERTAIN PRESCRIBED FORMS
104 SSARS NO. 4--COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR ACCOUNTANTS
105 SSARS NO. 5--REPORTING ON COMPILED FINANCIAL STATEMENTS
106 SSARS NO. 6--REPORTING ON PERSONAL FINANCIAL STATEMENTS INCLUDED IN WRITTEN PERSONAL FINANCIAL PLANS
107 SSARS NO. 7--OMNIBUS STATEMENT ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES--1992
108 SSARS NO. 8--AMENDMENT TO STATEMENT ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES NO. 1, COMPILATION AND REVIEW OF FINANCIAL STATEMENTS
109 SSARS NO. 9--OMNIBUS STATEMENT ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES--2002
110 SSARS NO. 10--PERFORMANCE OF REVIEW ENGAGEMENTS
111 SSARS NO. 11--STANDARDS FOR ACCOUNTING AND REVIEW SERVICES
112 SSARS NO. 12--OMNIBUS STATEMENT ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES--2005
113 SSARS NO. 13--COMPILATION OF SPECIFIED ELEMENTS, ACCOUNTS, OR ITEMS OF A FINANCIAL STATEMENT
114 SSARS NO. 14--COMPILATION OF PRO FORMA FINANCIAL INFORMATION
115 SSARS NO. 15--ELIMINATION OF CERTAIN REFERENCES TO STATEMENTS ON AUDITING STANDARDS AND INCORPORATION OF APPROPRIATE GUIDANCE INTO STATEMENTS ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES
116 SSARS NO. 16--DEFINING PROFESSIONAL REQUIREMENTS IN STATEMENTS ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES
117 SSARS NO. 17--OMNIBUS STATEMENT ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES--2008
118 SSARS NO. 18--APPLICABILITY OF STATEMENTS ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES
119 RECENT SSARS DEVELOPMENTS
ARSC Developments
Issuance of TIS 9150.25, Determining Whether Financial Statements Have Been Prepared by the Accountant.
Issuance of Interpretation No. 31, Preparation of Financial Statements for Use by an Entity's Auditors.
Issuance of SSARS No. 18, Applicability of Statements on Standards for Accounting and Review Services.
SSARS Exposure Draft.
AICPA's Compilation and Review Alert
Other AICPA Compilation and Review Practice Aids
120 RECENT ACCOUNTING DEVELOPMENTS
121 INTERNATIONAL COMPILATION AND REVIEW STANDARDS
122 THE IMPACT OF THE CURRENT ECONOMIC ENVIRONMENT ON COMPILATIONS AND REVIEWS
Fair Value Measurements and Disclosures
Authoritative Literature.
Accounting Considerations
Receivables.
Inventories.
Goodwill and Other Intangible Assets.
Long-lived Assets.
Declines in the Fair Value of Marketable Securities.
Troubled Debt Restructurings.
Exit or Disposal Activities and Discontinued Operations.
Liquidation of the Company
Disclosure Considerations
The Ability of the Company to Continue as a Going Concern.
Disclosure of Subsequent Events.
Disclosure of Commitments, Contingencies, Risks, and Uncertainties.
Commitments.
Contingencies.
Risks and Uncertainties.
APPENDIX 1A: Comparison of Compilation, Review, and Audit Engagements
APPENDIX 1B: Accounting Pronouncements Recently Issued or Soon to be Effective
CHAPTER 2: ENGAGEMENT ADMINISTRATION
200 CLIENT ACCEPTANCE AND CONTINUANCE
Prospective Client's Integrity
Sources of Information.
Evaluating Risk Due to the Nature of the Engagement
Evaluating Firm Competence, Capabilities, and Resources
Compliance With Legal and Ethical Requirements
Legal and Regulatory Requirements.
Ethical Requirements.
Continuing Clients
Significant Issues Discovered in the Acceptance or Continuance Process
201 DOES SSARS NO. 1 APPLY TO THIS ENGAGEMENT?
Scope of SSARS No. 1
Accounting Services
Preparing a Working Trial Balance.
Assisting in Adjusting the Books of Accounts and/or Consulting on Accounting Matters.
Tax Returns as Financial Statements.
Medicare/Medicaid Cost Reports as Financial Statements.
Providing Automated Accounting Services without Preparing Financial Statements.
Submitting Financial Statements
Introduction.
Definition of Submission.
Preparing Financial Statements.
Presenting Financial Statements.
Determining Whether You Have Submitted.
Illustrative Scenarios.
When SSARS Applies.
Summary.
Other SSARS Applicability Questions
Financial Statements Submitted by a CPA as an Owner, Director, Officer, or Employee.
Preparing and Presenting (Submitting) Financial Statements Electronically.
Financial Statements Submitted Electronically to State or Federal Agencies.
Specified Elements, Accounts, or Items of a Financial Statement.
Compliance with Aspects of Contractual Agreements or Regulatory Requirements.
Preparing and Presenting (Submitting) Issuer Financial Statements.
Preparation of Financial Statements for Use by the Entity's Auditors.
Other Issues.
What SSARS No. 1 Requires
202 RECOMMENDING A LEVEL OF SERVICE
Needs of Users
Needs of Management.
Needs of External Users.
Need for Comparative Financial Statements
Alternatives to Full Disclosure GAAP Financial Statements
Issuing Management-use-only Financial Statements.
Providing Monthly Reports Containing Only Selected Financial or Operational Information.
Compiling Financial Statements That Omit Substantially All Disclosures.
Compiling OCBOA Financial Statements.
Compiling Financial Statements That Have Measurement Departures.
Soft Close.
Independence
Commissions, Referral Fees, and Contingent Fees
203 ENGAGEMENT LETTERS
Introduction
Why Engagement Letters?
Will We Offend Our Long-standing Clients?
Overcoming Client Resistance
What SSARS No. 1 Requires
Understanding with the Entity When the Financial Statements Are for Third-party Use.
Understanding with the Entity When the Financial Statements Are for Management-use-only.
Engagement Letters When Reporting on Specified Elements or Pro Forma Financial Information--SSARS Nos. 13 and 14
Period Covered by the Engagement Letter
Using Engagement Letters to Minimize Liability
Additional Engagement Letter Provisions for Limiting a Firm's Liability
Undertaking-to-be-truthful Clauses.
Alternative Dispute Resolution.
Specifying a Time Limitation.
Informing Clients of Outsourcing Arrangements
204 CHANGES IN TYPE OF ENGAGEMENT AFTER COMMENCEMENT
Step-ups
Step-down from Audit to Review or Compilation
Step-down from Review to Compilation
Step-down from Full Disclosure to Omission of Substantially All Disclosures
Change from a Compilation of Third-party-use Financial Statements to a Compilation of Management-use-only Financial Statements
205 SUBSEQUENT EVENTS
Types of Subsequent Events
Reissued Financial Statements
206 SUBSEQUENT DISCOVERY OF FACTS EXISTING AT DATE OF REPORT
Legal Implications
Summary of Guidance
Notification of Users
207 WORKPAPER DOCUMENTATION
Required and Suggested Workpapers for a Review Engagement
Required and Suggested Workpapers for a Compilation of Third-party-use Financial Statements
Required and Suggested Workpapers for a Management-use-only Compilation Engagement
Documentation Requirements for Nonattest Services
Use of Checklists and Forms
Use of the Term Partner.
Maintaining Engagement Documentation
Assembly of Engagement Documentation.
Compilation and Review Documentation Assembly Requirements.
Retention of Engagement Documentation.
Compilation and Review Documentation Retention Requirements.
Retention Location.
Confidentiality, Custody, Integrity, Accessibility, and Retrievability of Engagement Documentation.
Confidentiality.
Custody, Integrity, Accessibility, and Retrievability.
Electronic Engagement Documentation.
208 WHEN TO WITHDRAW FROM AN ENGAGEMENT
209 COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR ACCOUNTANTS (SSARS NO. 4--AR 400)
Communications When Successor Believes Prior-period Financial Statements Require Revision
Inquiries in Connection with Acceptance of an Engagement
Other Inquiries
Summary Points
Communications with Continuing Accountants
210 PRACTICE ISSUES IN COMPILATION AND REVIEW ENGAGEMENTS
Litigation Risks
Quality Control.
Professional Liability Insurance.
Loss Prevention.
Engagement Letters.
Responsibility for Fraud and Illegal Acts
Use of Engagement Letters to Clarify the Accountant's Responsibilities.
Client Representation Letters in Review Engagements.
Communication of Suspected Fraud or Illegal Acts.
Other Practice Issues
Bookkeeping Services.
Licensing Problems.
Liability to Third Parties.
Third-party Privity Letters.
Services Performed for Issuers.
211 QUALITY CONTROL AND PEER REVIEW STANDARDS
Quality Control Standards
Major Provisions of SQCS No. 7.
Professional Requirements.
Elements of a Quality Control System.
Documentation and Communication of the Firm's QC Policies and Procedures.
Establishing Criteria for Engagement Quality Control Reviews (EQCR).
Relationship of SSARS to Quality Control Standards.
Peer Review Standards
Applicability of Peer Review Requirements.
Revisions to the Peer Review Standards.
Types of Reviews.
Engagement Reviews.
Performing Review Procedures.
Peer Review Requirements for SSARS Compilations of Management-use-only Financial Statements.
Peer Review Requirements for SSARS Compilations That Include Selected Financial Information.
Compilation and Review Checklists Should Comply with Peer Review and SSARS Standards
Quality Control Materials.
PPC's QCM Have Been Peer Reviewed.
Engagement Planning Considerations.
Peer Review Comment Letters
Code of Professional Conduct
212 OTHER ADMINISTRATIVE FORMS
Introduction
Trial Balance Preparation Checklist.
Routing Instructions for Processing Financial Statements.
Consultation, Differences of Opinion, and Engagement Withdrawal Documentation Form.
Report Transmittal Letter--Drafting Form.
213 ACCOUNTING SOFTWARE
Introduction
What Accounting Software Does.
Types of Accounting Software.
General Ledger Packages.
Write-up Packages.
Choosing a Software Package.
Software and Vendor Lists.
Computer Information Resources.
214 INDEPENDENCE ISSUES RELATING TO COMPILATION AND REVIEW ENGAGEMENTS
Authoritative Literature Relating to Independence
Conceptual Framework for Independence.
Impairment of Independence by Unpaid Fees
Does Providing Accounting/Write-up Services Impair a CPA's Independence?
Performance of Nonattest Services.
Additional Questions in Applying Interpretation 101-3 (ET 101.05).
Illustrative Examples.
215 CONSULTATION AND DIFFERENCES OF OPINION IN COMPILATION AND REVIEW ENGAGEMENTS
Do the Standards Require Accountants Performing Compilation and Review Engagements to Resolve Complex Technical Issues through Consultation?
When to Document Consultation
In-firm Consultation versus Outside-firm Consultation
In-firm Consultation.
Outside Firm Consultation.
Differences of Opinion
Withdrawing from an Engagement or Ending a Client Relationship
Documenting a Withdrawal.
Communicating the Decision to Withdraw or Discontinue Services.
Accounting and Engagement Issues Form.
APPENDIX 2A: Engagement Letter for Monthly, Quarterly, or Annual Engagements
Estimates to Which the Disclosure Requirement Applies.
Disclosure Requirements.
Current Vulnerability Due to Concentrations
What Is a Concentration?
Criteria for Disclosure.
Severe Impact.
Disclosures.
Summary of Disclosure Requirements.
Wording the Disclosures.
515 DERIVATIVE INSTRUMENTS
What Is a Derivative?
Accounting for Derivatives
Disclosure Requirements
Common Uses of Derivatives
Interest Rate Swap
Options to Establish a Range of Interest Rates
Forward Contract to Buy Foreign Currency
Option to Buy Foreign Currency
516 TRADE ACCOUNTS RECEIVABLE
Disclosures about Trade Accounts Receivable
Accounting Policies for Trade Receivables and Credit Losses and Doubtful Accounts.
Carrying Amount of Trade Receivables Pledged as Collateral.
Amount of the Valuation Allowance and Material Changes in the Allowance.
517 COMPANIES THAT CHANGE FISCAL YEAR
518 ADVERTISING COSTS
When Should Advertising Costs Be Expensed?
When Should Advertising Costs Be Capitalized?
Direct-response Advertising Costs to Capitalize and Amortize
Practical Consideration
Required Disclosures
519 CONSIDERING THE NEED TO CONSOLIDATE A VARIABLE INTEREST ENTITY
A Look at the Development of the Authoritative Accounting Literature
When to Consider Whether the Reporting Entity Has a Variable Interest in a Variable Interest Entity
Some Notions Underlying the Remaining Considerations
The Notions of Losses, Benefits, and Sufficiency of Equity.
Assessing the Sufficiency of Equity.
The Power to Direct Significant Activities.
Determining Whether the Other Entity is a Variable Interest Entity
Determining Whether the Reporting Entity Has a Variable Interest in a Variable Interest Entity
Determining Whether Consolidation is Required
Is There a Principal-agency Relationship between Members of the Related-party Group?
Are the Activities of the Lessor More Important to One Member of the Related-party Group Than to Another?
Does One Party Have More Exposure to the Variability Associated with the Anticipated Economic Performance of the Variable Interest Entity?
What Is the Design of the Lessor?
Evaluating the Results.
520 UNCERTAINTIES REGARDING TAX POSITIONS
Accounting for Uncertainty in Income Taxes
FIN 48 Amendments.
521 CONSOLIDATED, CONSOLIDATING, AND COMBINED FINANCIAL STATEMENTS
Consolidated and Consolidating Financial Statements
Reporting Implications of Consolidating Financial Statements
Combined Financial Statements
Combined Financial Statement Style and Format Considerations
Equity Section.
522 FAIR VALUE MEASUREMENTS
The Definition of Fair Value
The Assets or Liabilities
The Price
The Market
Market Participants
Asset Valuation Considerations
Liability Valuation Considerations
Initial Recognition
Valuation Techniques
Valuation Inputs and the Fair Value Hierarchy
Level 1 Inputs.
Level 2 Inputs.
Level 3 Inputs.
Inactive Markets
FSP FAS 157-4
APPENDIX 5A: Illustrative Financial Statements--Comparative Accrual Basis Corporation with Supplementary Information
APPENDIX 5B: Selected Notes
APPENDIX 5C: Disclosure Checklists
APPENDIX 5C-1: Summarized Disclosure Checklist
APPENDIX 5C-2: Disclosure Requirements for Financial Statements of Nonpublic Businesses (Long-form Disclosure Checklist)
APPENDIX 5D: Determining the Impact of Accounting Requirements on Variable Interest Entities on a Reporting Entity After the Effective Date of SFAS No. 167
CHAPTER 6: REPORTING ON COMPILED OR REVIEWED FINANCIAL STATEMENTS
600 THE ACCOUNTANT'S REPORTING OBLIGATION
Exposure Draft Impact on Reporting
601 COMPILATION REPORTS
Required Elements
Reference to Country of Origin
Financial Statements Prepared in Accordance with International Standards
602 REVIEW REPORTS
Required Elements
Reference to Country of Origin
Financial Statements Prepared in Accordance with International Standards
603 HIGHEST LEVEL OF SERVICE
Different Levels of Service on the Same Financial Statements
Different Levels of Service on Financial Statements of the Same Period
604 DATE OF REPORTS
605 REFERENCE TO ACCOUNTANT'S REPORT ON THE FINANCIAL STATEMENTS
606 REPORTING WHEN NOT INDEPENDENT
607 REPORTING ON FINANCIAL STATEMENTS THAT OMIT SUBSTANTIALLY ALL DISCLOSURES
608 REPORTING WHEN THE STATEMENT OF CASH FLOWS OR COMPREHENSIVE INCOME IS OMITTED
Omission of Statement of Cash Flows
Omission of Comprehensive Income
609 REPORTING ON FINANCIAL STATEMENTS WITH DEPARTURES FROM GAAP (EXCLUDING PRESCRIBED FORMS AND SPECIAL-PURPOSE PRESENTATIONS NOT IN CONFORMITY WITH GAAP)
What Is GAAP?
Changes to This Guide for the Codification.
What Is a Material GAAP Departure?
Alternatives When Faced with a GAAP Departure
610 REPORTING WHEN THERE ARE SIGNIFICANT DEPARTURES FROM GAAP (EXCLUDING PRESCRIBED FORMS AND SPECIAL-PURPOSE PRESENTATIONS NOT IN CONFORMITY WITH GAAP)
611 REPORTING ON COMPUTER-PREPARED FINANCIAL STATEMENTS
612 REPORTING WHEN THERE IS A SCOPE LIMITATION
613 REPORTING ON FINANCIAL STATEMENTS INCLUDED IN MCS REPORTS
Financial Statements Compiled or Reviewed by Another Accountant
Client-prepared Financial Statements
Historical Financial Information Derived from a Tax Return and Included in a Business Valuation
614 REPORTING WHEN ONLY ONE FINANCIAL STATEMENT IS PRESENTED
615 REPORTING WHEN SUPPLEMENTARY INFORMATION IS PRESENTED
What Is the Definition of Supplementary Information?
Supplementary Information Accompanying Compiled Financial Statements
Supplementary Information Accompanying Reviewed Financial Statements
Client-prepared Supplementary Information
Client-prepared Supplementary Information Bound in the Accountant's Report Cover.
Supplementary Information Attached by the Client.
Are Percentages Presented on Financial Statements Supplementary Information?
Is a Forecast or Projection Presented with Historical Financial Statements Supplementary Information?
Supplementary Information Presented without Financial Statements
Presentation Guidelines for Supplementary Information
616 REQUIRED SUPPLEMENTARY INFORMATION
Oil and Gas Producing Companies
Common Interest Realty Associations
Required Supplementary Information.
Compilation Procedures.
Reporting on the Required Supplementary Information.
617 REPORTING ON CHARTS AND GRAPHS
Charts and Graphs That Accompany Financial Statements
Stand-alone Charts and Graphs
618 REPORTING ON COMPARATIVE FINANCIAL STATEMENTS
Standard Reports
Change in Level of Service--Current Period Reviewed/Prior Period Compiled
Change in Level of Service--Current Period Compiled/Prior Period Reviewed
Change in Level of Service--Current Period Audited/Prior Period Compiled or Reviewed
Change in Level of Service--Current Period Compiled or Reviewed/Prior Period Audited
Change in Level of Service--Disclosures Omitted
Change of Accountants--General
Change of Accountants--Predecessor Accountant Reissues His Report
Change of Accountants--Reference Made to Predecessor Accountant's Report
The Reference to the Predecessor Accountant's Report Should Not Include the Name of the Predecessor Accountant
Change of Accountants--Successor Accountant Compiles, Reviews, or Audits Prior-period Financial Statements
Change of Accountants--Reporting Following a Merger or Purchase of an Accounting Firm
Change of Accountants--Predecessor Accountant Has Ceased Operations
Change of Accountants--What Is the Best Option?
Change of Status--Issuer to Nonissuer
Change of Status--Nonissuer to Issuer
Change in Prior-period Financial Statements--General
Change in Prior-period Financial Statements--Continuing Accountant
APPENDIX 6A: Compilation Reports for Accrual Basis Corporations
APPENDIX 6A-1: Compilation--Corporation on the Accrual Basis, Standard Report
APPENDIX 6A-2: Compilation--Corporation on the Accrual Basis, Lack of Independence
APPENDIX 6A-3: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted
APPENDIX 6A-4: Compilation--Corporation on the Accrual Basis, Statement of Cash Flows Omitted
APPENDIX 6A-5: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Property Carried at Appraised Value) and Impact of Departure Is Determined
APPENDIX 6A-6: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Manufacturing Overhead Excluded from Inventory and Leases Not Capitalized) and Impact of Departure Not Determined
APPENDIX 6A-7: Compilation--Corporation on the Accrual Basis, Balance Sheet Only
APPENDIX 6A-8: Compilation--Corporation on the Accrual Basis, Balance Sheet Only, Substantially All Disclosures Omitted
APPENDIX 6A-9: Compilation--Corporation on the Accrual Basis, Income Statement Only
APPENDIX 6A-10: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted and Statement of Cash Flows Omitted
APPENDIX 6A-11: Compilation--Corporation on the Accrual Basis, Compiled Supplementary Information Presented
APPENDIX 6A-12: Compilation--Corporation on the Accrual Basis, Disclosure Departure (Failure to Disclose Information about Financial Instruments with Concentrations of Credit Risk) from GAAP and Impact of Departure Is Determined
APPENDIX 6A-13: Compilation--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Future Commitments under Long-term Operating Leases) and Impact of Departure Not Determined
APPENDIX 6A-14: Compilation--Corporation on the Accrual Basis, Income Statement Accompanied by Expired Budget Information
APPENDIX 6A-15: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Depreciation Computed Using Modified Accelerated Cost Recovery System Guidelines) and Impact of Departure Not Determined
APPENDIX 6A-16: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Deferred Taxes) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 6A-17: Compilation--Corporation on the Accrual Basis, Compiled Supplementary Information Presented, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 6A-18: Compilation--Standard Report on Consolidated Financial Statements of a Corporation
APPENDIX 6A-19: Compilation--Standard Report on Combined Financial Statements
APPENDIX 6A-20: Compilation--Wholly-owned Subsidiary Corporation on the Accrual Basis, Standard Report
APPENDIX 6A-21: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Provision for Uncollectible Accounts Receivable) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 6A-22: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Income Tax Accrual) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 6A-23: Compilation--Branch of a Corporation on the Accrual Basis, Standard Report
APPENDIX 6A-24: Compilation--Corporation on the Accrual Basis, Comprehensive Income Omitted
APPENDIX 6A-25: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted and Display of Comprehensive Income Omitted
APPENDIX 6A-26: Compilation of a Specified Element, Account, or Item of a Financial Statement
APPENDIX 6A-27: Compilation of Pro Forma Financial Information
APPENDIX 6A-28: Compilation--Corporation on the Accrual Basis, Departure from GAAP (Unconsolidated Variable Interest Entity) and Impact of Departure Not Determined
APPENDIX 6B: Review Reports for Accrual Basis Corporations
APPENDIX 6B-1: Review--Corporation on the Accrual Basis, Standard Report
APPENDIX 6B-2: Review--Corporation on the Accrual Basis, Statement of Cash Flows Omitted
APPENDIX 6B-3: Review--Corporation on the Accrual Basis, Measurement Departure from GAAP (Property Carried at Appraised Value) and Impact of Departure Is Determined
APPENDIX 6B-4: Review--Corporation on the Accrual Basis, Measurement Departure from GAAP (Manufacturing Overhead Excluded from Inventory and Leases Not Capitalized) and Impact of Departure Not Determined
APPENDIX 6B-5: Review--Corporation on the Accrual Basis, Balance Sheet Only
APPENDIX 6B-6: Review--Corporation on the Accrual Basis, Supplementary Information Covered by Review Procedures
APPENDIX 6B-7: Review--Corporation on the Accrual Basis, Supplementary Information Not Covered by Review Procedures
APPENDIX 6B-8: Review--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Related Party Transactions) and Impact of Departure Is Determined
APPENDIX 6B-9: Review--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Future Commitments under Long-term Operating Leases) and Impact of Departure Not Determined
APPENDIX 6B-10: Review--Corporation on the Accrual Basis, Income Statement Accompanied by Expired Budget Information Not Covered by Review Procedures
APPENDIX 6B-11: Review--Standard Report on Consolidated Financial Statements of a Corporation
APPENDIX 6B-12: Review--Standard Report on Combined Financial Statements of a Corporation
APPENDIX 6B-13: Review--Corporation on the Accrual Basis, Comprehensive Income Omitted
APPENDIX 6B-14: Review--Corporation on the Accrual Basis, Departure from GAAP (Unconsolidated Variable Interest Entity) and Impact of Departure Not Determined
APPENDIX 6C: Comparative Compilation and Review Reports
APPENDIX 6C-1: Comparative Statements--Each Period Compiled by Continuing Accountant
APPENDIX 6C-2: Comparative Statements--Each Period Reviewed by Continuing Accountant
APPENDIX 6C-3: Comparative Statements--Current Period Reviewed and Prior Period Compiled by Continuing Accountant
APPENDIX 6C-4: Comparative Statements--Current Period Compiled and Prior Period Reviewed by Continuing Accountant, Alternative 1 (Referring to Prior Period Review Report)
APPENDIX 6C-5: Comparative Statements--Current Period Compiled and Prior Period Reviewed by Continuing Accountant, Alternative 2 (Reissuing Prior Year Report)
APPENDIX 6C-6: Comparative Statements--Both Years Compiled; However, Prior Year by a Different Accountant (Predecessor's Report Not Presented)
APPENDIX 6C-7: Comparative Statements--Both Years Reviewed; However, Prior Year by a Different Accountant (Predecessor's Report Not Presented)
APPENDIX 6C-8: Comparative Statements--Current Year Reviewed and Prior Year Compiled by a Different Accountant (Predecessor's Report Not Presented)
APPENDIX 6C-9: Comparative Statements--Current Year Compiled and Prior Year Reviewed by a Different Accountant (Predecessor's Report Not Presented)
APPENDIX 6C-10: Comparative Statements--Both Years Compiled by the Same Accountant; However, Changed Reference to a Departure from GAAP in Prior Year Report
APPENDIX 6C-11: Comparative Statements--Both Years Reviewed by the Same Accountant; However, Changed Reference to a Departure from GAAP in Prior Year Report
APPENDIX 6C-12: Comparative Statements--Current Period Compiled, Prior Period Audited
APPENDIX 6C-13: Comparative Statements--Current Period Reviewed, Prior Period Audited
APPENDIX 6C-14: Comparative Statements--Current Period Audited, Prior Period Compiled
APPENDIX 6C-15: Comparative Statements--Current Period Audited, Prior Period Reviewed
APPENDIX 6C-16: Comparative Statements--Compilation Report on Prior Year's Financial Statements That Previously Did Not Omit Substantially All Disclosures
APPENDIX 6C-17: Comparative Statements--Current Month Compilation Compared to Year-to-date Review with Omission of Statement of Cash Flows
APPENDIX 6C-18: Comparative Statements--Both Years Compiled; However, Prior Year by a Different Accountant Who Has Ceased Operations
APPENDIX 6C-19: Comparative Statements--Both Years Reviewed; However, Prior Year by a Different Accountant Who Has Ceased Operations
APPENDIX 6C-20: Comparative Statements--Current Year Compiled and Prior Year Audited by a Different Accountant Who Has Ceased Operations
APPENDIX 6C-21: Comparative Statements--Current Year Reviewed and Prior Year Audited by a Different Accountant Who Has Ceased Operations
APPENDIX 6C-22: Comparative Statements--Current Period Compiled, Prior Period Audited, Supplementary Information Presented Both Years
APPENDIX 6C-23: Comparative Statements--Current Period Reviewed, Prior Period Audited, Supplementary Information Presented Both Years
APPENDIX 6C-24: Comparative Statements--Corporation on the Accrual Basis, Balance Sheet Only, Each Period Compiled by Continuing Accountant
APPENDIX 6C-25: Comparative Statements--Compiled Current Year Balance Sheet and Comparative Statements of Income and Retained Earnings and Cash Flows
APPENDIX 6C-26: Comparative Statements--Reviewed Current Year Balance Sheet and Comparative Statements of Income and Retained Earnings and Cash Flows
APPENDIX 6C-27: Comparative Statements--Both Years Compiled; However, Prior Year Financial Statements Have Been Restated
APPENDIX 6C-28: Comparative Statements--Both Years Reviewed; However, Prior Year Financial Statements Have Been Restated
APPENDIX 6D: Unusual Variations of Compilation and Review Reports
APPENDIX 6D-1: Review--Major Uncertainty, Ability to Continue as a Going Concern in Question
APPENDIX 6D-3: Audited Balance Sheet and Other Statements Disclaimed because of Inability to Observe Beginning Inventory (First Examination)
APPENDIX 6D-4: Review--Reporting When Part of the Consolidated Statements Are Reviewed or Audited by Another Accountant
APPENDIX 6D-5: Departure from GAAP--Change in Accounting Principle without Reasonable Justification
APPENDIX 6D-6: Compilation--Reporting on the First Year of Operations (Which May Be for 12 Months or a Shorter Period)
APPENDIX 6D-7: Compilation--Current Year Presented on the Liquidation Basis; Prior Year Presented on the Going Concern Basis
APPENDIX 6D-8: Compilation--Development Stage Company
APPENDIX 6D-9: Compilation--Special-purpose Financial Presentation That Is Not in Conformity with GAAP or OCBOA
APPENDIX 6D-10: Review--Special-purpose Financial Presentation That Is Not in Conformity with GAAP or OCBOA
APPENDIX 6D-11: Compilation--Comparative Statements with Prior Period Reporting on the First Year of Operations (Which May Be for 12 Months or a Shorter Period)
APPENDIX 6D-12: Review--Supplementary Information Presented for Periods Prior to Those of the Financial Statements
APPENDIX 6D-13: Compilation--Special-purpose Financial Presentation That Is an Incomplete Presentation but Is Otherwise in Conformity with GAAP or OCBOA
APPENDIX 6D-14: Review--Special-purpose Financial Presentation That Is an Incomplete Presentation but Is Otherwise in Conformity with GAAP or OCBOA
APPENDIX 6E: Reports on the Application of Accounting Principles
APPENDIX 6E-1: Long-term Lease Transaction
APPENDIX 6E-2: Issuance of Additional Shares of Common Stock to Holders of Convertible Preferred Stock
APPENDIX 6F: Compilation Reports for Nonprofit Organizations
APPENDIX 6F-1: Standard Nonprofit Organization Compilation Report
APPENDIX 6F-2: Nonprofit Organization Compilation Report--Substantially All Disclosures Omitted
APPENDIX 6F-3: Nonprofit Organization Compilation Report--Measurement Departure from GAAP (Improper Accounting for Donated Property) and Impact of Departure Not Determined
APPENDIX 6F-4: Nonprofit Organization Compilation Report--Cash Basis Financial Statements, Basis of Accounting Disclosed in Financial Statements
APPENDIX 6G: Review Reports for Nonprofit Organizations
APPENDIX 6G-1: Standard Nonprofit Organization Review Report
APPENDIX 6G-2: Nonprofit Organization Review--Measurement Departure from GAAP (Improper Functional Allocation of Expenses) and Impact of Departure Is Determined
APPENDIX 6G-3: Nonprofit Organization Review Report--Cash Basis Financial Statements, Basis of Accounting Disclosed in Financial Statements
APPENDIX 6H: Compilation Reports for Governmental Entities
APPENDIX 6H-1: Standard Compilation Report for a Governmental Entity
APPENDIX 6H-2: Governmental Entity Compilation Report--Substantially All Disclosures Omitted
APPENDIX 6H-3: Governmental Entity Compilation Report--Departure from GAAP (Omission of Compensated Absences) and Impact of Departure Not Determined
APPENDIX 6H-4: Governmental Entity Compilation Report--Cash Basis Financial Statements, Basis of Accounting Disclosed in Financial Statements
APPENDIX 6I: Review Reports for Governmental Entities
APPENDIX 6I-1: Standard Review Report for a Governmental Entity
APPENDIX 6I-2: Governmental Entity Review Report--Departure from GAAP (Omission of Compensated Absences) and Impact of Departure Not Determined
APPENDIX 6I-3: Governmental Entity Review Report--Cash Basis Financial Statements, Basis of Accounting Disclosed in Financial Statements
CHAPTER 7: INTERIM ENGAGEMENTS
700 PURPOSE OF THIS CHAPTER
701 USING PPC'S FORMS AND CHECKLISTS IN INTERIM ENGAGEMENTS
Are Interim Engagements Subject to Peer Review?
Using PPC's Forms and Checklists in Interim Compilation Engagements
Documenting Procedures in Interim Compilation Engagements
Completing a Compilation Procedures, Review, and Approval Form.
Completing an Interim Summarized Form.
Other Alternatives.
Special Considerations for the First Interim Period.
Special Considerations for Twelfth-month Interim Statements.
Partner Review on Recurring Interim Engagements.
702 GENERAL ACCOUNTING RULES FOR INTERIM FINANCIAL STATEMENTS
703 REVENUE RECOGNITION
704 INVENTORY AND COST OF GOODS SOLD
Gross Profit Method
Market Declines
LIFO Inventory Approximations
LIFO Inventory Liquidations
Standard Cost System
705 OTHER COSTS AND EXPENSES
706 INCOME TAXES
Overview of Accounting Requirements
Interim Income Taxes When Ordinary Income Is Estimated for the Year
Interim Income Taxes When Ordinary Income Is Estimated for the Year But There Is an Interim Loss
Interim Income Taxes When an Ordinary Loss Is Estimated for the Year
Prior-year Operating Loss Carryforwards
Accounting for Changes in Tax Rates or New Tax Legislation
Disclosure Considerations
Classifying Deferred Tax Balance Sheet Accounts
707 EXTRAORDINARY ITEMS, UNUSUAL OR INFREQUENTLY OCCURRING ITEMS, AND DISPOSAL OF A COMPONENT OF AN ENTITY
Definitions
Extraordinary Items.
Unusual or Infrequently Occurring Items.
Component of an Entity.
Financial Statement Presentation
708 WHEN TO CORRECT PRIOR PERIOD INTERIM FINANCIAL STATEMENTS
Prior Period Adjustments
Examples
Adjustments Related to Prior Interim Periods of the Current Fiscal Year
Prior Interim Period Adjustments That Are Not Errors.
Prior Interim Period Adjustments That Are Errors.
Materiality
709 ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS
General
Change in Accounting Estimate
Change in Reporting Entity
Change in Accounting Principle
Disclosure of Change in Accounting Principle
Materiality
710 DISCLOSURES IN INTERIM FINANCIAL STATEMENTS OF NONISSUERS
711 REPORTING ISSUES
Introduction
Use of Different Bases of Accounting at Interim and Annual Periods
Disclosing the Basis of Accounting in OCBOA Financial Statements
Change in the Basis of Accounting
Special Considerations for Twelfth-month Interim Statements When a Higher Level of Service Will Be Performed
Using Standardized Reports
712 ILLUSTRATIVE INTERIM FINANCIAL STATEMENTS
APPENDIX 7A: Compilation Procedures, Review, and Approval Forms for Recurring Interim Engagements
APPENDIX 7A-1: Compilation Procedures, Review, and Approval Form for Recurring Interim Engagements
APPENDIX 7A-2: Compilation Procedures, Review, and Approval Form for Recurring Interim Engagements to Provide Management-use-only Financial Statements
APPENDIX 7B: Accountant's Reports for Interim Financial Statements
APPENDIX 7B-1: Compilation--Year-to-date Interim Period
APPENDIX 7B-2: Compilation--Quarter and Year-to-date, Substantially All Disclosures Omitted
APPENDIX 7B-3: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows and Substantially All Disclosures, e.g., Computer-prepared Statements
APPENDIX 7B-4: Compilation--Year-to-date, Omission of Statement of Cash Flows, Federal Income Tax Provision and Disclosures, e.g., Computer-prepared Statements
APPENDIX 7B-5: Compilation--Comparative Interim Periods
APPENDIX 7B-6: Compilation--Comparative Month and Year-to-date, Statements of Cash Flows and Disclosures Omitted
APPENDIX 7B-7: Compilation--Month and Year-to-date, Inventory Computed by the Gross Profit Method, Substantially All Disclosures and Statements of Cash Flows Omitted
APPENDIX 7B-8: Compilation--Departure from GAAP, Use of FIFO at Interim Date for a Company on LIFO
APPENDIX 7B-9: Compilation--Departure from the Revenue Recognition Principle Used in the Year-end Financial Statements, Statement of Cash Flows Omitted
APPENDIX 7B-10: Compilation--Departure from GAAP, No Income Tax Accrual or Change in Inventory, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 7B-11: Comparative Financial Statements--Current Month Compilation Compared to Year-to-date Review, Statements of Cash Flows Omitted
APPENDIX 7B-12: Compilation--Departure from GAAP, Accounts Receivable and Accounts Payable Not Recorded, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 7B-13: Compilation--Current Period Balance Sheet, Month and Year-to-date Comparative Income Statements Accompanied by Expired Budgeted Information for the Current Period, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 7B-14: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows, Deferred Taxes, and Substantially All Disclosures
APPENDIX 7B-15: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows, Depreciation Expense, and Substantially All Disclosures
APPENDIX 7C: Illustrative Interim Financial Statements--S Corporation--Compiled, Income Tax Basis, Interim Financial Statements with Disclosures Omitted, Prepared Using Accounting Software Package
CHAPTER 8: FINANCIAL STATEMENTS PRESENTED ON AN OTHER COMPREHENSIVE BASIS OF ACCOUNTING
800 GENERAL BACKGROUND INFORMATION
801 OCBOA AND ACCOUNTING STANDARDS
Standards Overload
Authoritative Literature
802 DECIDING WHEN TO USE AN OCBOA
Cash and Modified Cash Bases
Tax Basis
803 DEFINITIONS
Cash or Modified Cash Basis
Tax Basis
804 USE OF DIFFERENT BASES OF ACCOUNTING
Change in Basis of Accounting
Use of Different Bases of Accounting for Financial Statements of the Same Period
805 STATEMENT TITLES FOR CASH AND TAX BASIS FINANCIAL STATEMENTS
806 STATEMENT OF CASH FLOWS
807 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
808 STATEMENT OF RETAINED EARNINGS
809 COMPREHENSIVE INCOME
810 PRESENTATION CONSIDERATIONS
Captions within OCBOA Financial Statements
Nontaxable Revenues and Nondeductible Expenses in Tax Basis Financial Statements
811 DISCLOSURE OF BASIS OF ACCOUNTING
812 OTHER DISCLOSURES IN OCBOA PRESENTATIONS
Authoritative Literature
Financial Statement Items for Which GAAP Would Require Disclosure
Summary of Significant Accounting Policies
Other Information That GAAP Would Require Disclosing
Risks and Uncertainties
813 CASH TO ACCRUAL CONVERSIONS
814 ILLUSTRATIVE FINANCIAL STATEMENTS
815 SAMPLE ENGAGEMENT AND REPRESENTATION LETTERS
816 SAMPLE ACCOUNTANT'S REPORTS
APPENDIX 8A: Engagement Letters for OCBOA Financial Statements
APPENDIX 8A-1: Engagement Letter--Compilation of OCBOA Financial Statements
APPENDIX 8A-2: Engagement Letter--Review of OCBOA Financial Statements
APPENDIX 8C-3: Illustrative Statement of Cash Flows--Cash Basis
APPENDIX 8C-4: Compiled (Pure) Cash Basis--Substantially All Disclosures Omitted
APPENDIX 8D: Compilation Reports for Cash Basis Corporations
APPENDIX 8D-1: Compilation--Standard Report on Cash Basis Financial Statements, Basis of Accounting Disclosed in Financial Statements
APPENDIX 8D-2: Compilation--Cash Basis, Lack of Independence
APPENDIX 8D-3: Compilation--Cash Basis, Substantially All Disclosures Omitted
APPENDIX 8D-4: Compilation--Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined
APPENDIX 8D-5: Compilation--Cash Basis, Departure from the Cash Basis (Land Recorded at Appraised Value), Impact of the Departure Not Determined
APPENDIX 8D-6: Compilation--Cash Basis Statement of Assets, Liabilities, and Equity Only
APPENDIX 8D-7: Compilation--Cash Basis Statement of Assets, Liabilities, and Equity Only, Substantially All Disclosures Omitted
APPENDIX 8D-8: Compilation--Cash Basis, Supplementary Information Presented
APPENDIX 8D-9: Compilation--Cash Basis Statement of Revenues and Expenses and Retained Earnings Only
APPENDIX 8D-10: Compilation--Statement of Cash Receipts and Disbursements Only
APPENDIX 8E: Compilation Reports for Tax Basis Corporations
APPENDIX 8E-1: Compilation--Standard Report on Tax Basis Financial Statements, Basis of Accounting Disclosed
APPENDIX 8E-2: Compilation--Tax Basis, Lack of Independence
APPENDIX 8E-3: Compilation--Tax Basis, Substantially All Disclosures Omitted
APPENDIX 8E-4: Compilation--Tax Basis Statement of Assets, Liabilities, and Equity Only
APPENDIX 8E-5: Compilation--Tax Basis Statement of Assets, Liabilities, and Equity Only, Substantially All Disclosures Omitted
APPENDIX 8E-6: Compilation--Tax Basis, Supplementary Information Presented
APPENDIX 8E-7: Compilation--Tax Basis, Interim Financial Statements, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
APPENDIX 8E-8: Compilation--Tax Basis, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Income Tax Provision), Impact of Departure Not Determined
APPENDIX 8E-9: Compilation--Tax Basis, Substantially All Disclosures Omitted, Departure from the Tax Basis (Accounts Receivable and Accounts Payable Not Recorded), Impact of Departure Not Determined
APPENDIX 8E-10: Compilation--Comparative Income Tax Basis Financial Statements, Each Period Compiled by Continuing Accountant
APPENDIX 8E-11: Compilation--Comparative Income Tax Basis Month and Year-to-date Financial Statements, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
APPENDIX 8E-12: Compilation--Comparative Income Tax Basis Month and Year-to-date Financial Statements, Substantially All Disclosures Omitted
APPENDIX 8F: Review Reports for Cash Basis Corporations
APPENDIX 8F-1: Review--Standard Report on Cash Basis Financial Statements
APPENDIX 8F-2: Review--Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined
APPENDIX 8F-3: Review--Cash Basis, Departure from the Cash Basis (Land Recorded at Appraised Value), Impact of the Departure Not Determined
APPENDIX 8F-4: Review--Cash Basis Statement of Assets, Liabilities, and Equity Only
APPENDIX 8F-5: Review--Cash Basis, Supplementary Information Covered by Review Procedures
APPENDIX 8F-6: Review--Cash Basis, Supplementary Information Not Covered by Review Procedures
APPENDIX 8F-7: Review--Statement of Cash Receipts and Disbursements Only
APPENDIX 8G: Review Reports for Tax Basis Corporations
APPENDIX 8G-1: Review--Standard Report on Tax Basis Financial Statements
APPENDIX 8G-2: Review--Tax Basis Statement of Assets, Liabilities, and Equity Only
APPENDIX 8G-3: Review--Tax Basis, Supplementary Information Covered by Review Procedures
APPENDIX 8G-4: Review--Tax Basis, Supplementary Information Not Covered by Review Procedures
APPENDIX 8G-5: Review--Tax Basis, Interim Financial Statements, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
APPENDIX 8G-6: Review--Comparative Income Tax Basis Financial Statements, Each Period Reviewed by Continuing Accountant
CHAPTER 9: PERSONAL FINANCIAL STATEMENTS
900 GENERAL
Personal Financial Statements Guidance
Two-column Presentation (Estimated Current Value and Historical Costs)
901 ENTITY TO BE COVERED
Ownership Information
902 BASIS OF PRESENTATION
Estimated Current Value Basis
Cash or Accrual?
Other Comprehensive Bases of Accounting
903 FORM AND CONTENT
Statement of Financial Condition
Statement of Changes in Net Worth
Comparative Financial Statements
Business Interests
Problems When Financial Statements Are Not Available
Personal Effects
Future Interests
Noncancelable Commitments
Income Taxes Payable
Disclosures
Contingencies, Risks, and Uncertainties.
904 ESTIMATED CURRENT VALUE BASIS OF ACCOUNTING
Definitions
Methods of Determining Estimated Current Value
Consistency in the Application of the Methods
Suggested Methods for Specific Assets
Range of Values
Estimated Income Taxes on Differences between Estimated Current Values and Amounts and Tax Bases
905 PERSONAL FINANCIAL STATEMENT ENGAGEMENTS
General
Acceptance of Clients
Engagement Letters
Inadequate Accounting Records/Gathering Information
Personal Financial Statements Worksheet
Client Representation Letters
Inability to Obtain Tax Bases of Assets
906 COMPILATION OF PERSONAL FINANCIAL STATEMENTS
Applicability of SSARS
Responsibility for Estimated Current Values
Obtaining a Representation Letter
Personal Financial Statements Worksheet
Personal Financial Statements Intended for Client Use Only
907 REVIEWS OF PERSONAL FINANCIAL STATEMENTS
Applicability of SSARS No. 1
General Requirements
Inquiry and Analytical Procedures
Reading the Financial Statements
Obtaining a Representation Letter
Personal Financial Statements Worksheet and Addendum for Review Engagements
908 REPORTING ON COMPILED OR REVIEWED PERSONAL FINANCIAL STATEMENTS
The Standard Reports
Compiled Personal Financial Statements That Omit Substantially All Disclosures
GAAP Departures
Quantification of the Effect of a GAAP Departure
GAAP Consistency Departures
Uncertainties
Scope Limitations
Examples of Accountant's Reports
909 CASE STUDIES
Computation of the Income Tax Liabilities--A Typical Engagement
Facts.
The Current Tax Liability.
The Estimated Future Tax Liability.
Recognition of an Interest in a Trust
Interest in a Testamentary Trust
Jane's Income Beneficiary Value.
Rett's Remainderman Value.
The Value of the Trust in Combined Families' Financial Statements.
Wealthy Individual Does Not Desire to Present All of His Assets
Elimination of an Individual's Receivables or Payables on the Financial Statements of a Closely Held Business
Elimination of Profit in Assets Sold to a Closely Held Company
Problems with Historical Cost Presentations
Impairment of Long-lived Assets.
Omission of Deferred Taxes.
The CPA Prepares His Own Personal Financial Statements
910 ILLUSTRATIVE PERSONAL FINANCIAL STATEMENTS
APPENDIX 9A: Engagement Letters
APPENDIX 9A-1: Engagement Letter--Compilation of Personal Financial Statements
APPENDIX 9A-2: Engagement Letter--Review of Personal Financial Statements
APPENDIX 9B: Personal Financial Statement Preparer's Worksheet
APPENDIX 9C: Addendum to Preparer's Worksheet for Reviewed Personal Financial Statements
APPENDIX 9D: Disclosure Checklist for Personal Financial Statements
APPENDIX 9E: Client Representation Letter
APPENDIX 9F: Illustrative Personal Financial Statements
APPENDIX 9F-1: Illustrative Personal Financial Statements Adapted from FASB ASC 274 (formerly SOP 82-1)
APPENDIX 9F-2: Computing the Excess of the Estimated Current Values of Assets over Their Tax Bases and the Estimated Income Taxes on the Excess
APPENDIX 9G: Compilation Reports for Personal Financial Statements
APPENDIX 9G-1: Compilation--Standard Report
APPENDIX 9G-2: Compilation--Statement of Changes in Net Worth Included
APPENDIX 9G-3: Compilation--Accountant Is Not Independent
APPENDIX 9G-4: Compilation--Substantially All Disclosures Omitted
APPENDIX 9G-5: Compilation--Departure from GAAP, Failure to Include a Provision for Income Taxes on Net Unrealized Appreciation
APPENDIX 9G-6: Compilation--Departure from GAAP, Failure to Segregate Community Property in the Statement of Financial Condition of a Husband Only
APPENDIX 9G-7: Compilation--Personal Financial Statement Included in Certain Prescribed Forms
APPENDIX 9G-8: Compilation--Personal Financial Statement with Supplementary Information
APPENDIX 9G-11: Compilation--Historical Costs as Supplementary Information
APPENDIX 9G-12: Compilation--Departure from GAAP, Change in the Method of Computing Estimated Current Values at Client's Discretion
APPENDIX 9G-13: Compilation--Departure from GAAP, Material Asset at Cost
APPENDIX 9G-14: Compilation--Departure from GAAP, Inappropriate Valuation Method
APPENDIX 9H: Review Reports for Personal Financial Statements
APPENDIX 9H-1: Review--Standard Report
APPENDIX 9H-2: Review--Statement of Changes in Net Worth Included
APPENDIX 9H-3: Review--Departure from GAAP, Financial Statements Prepared for Husband Only but Include Wife's Separate Property
APPENDIX 9H-4: Review--Departure from GAAP, Failure to Include a Provision for Income Taxes on Net Unrealized Appreciation
APPENDIX 9H-5: Review--Supplementary Information Reviewed
APPENDIX 9H-6: Review--Supplementary Information Compiled
APPENDIX 9H-7: Review--Income Tax Basis
APPENDIX 9H-8: Review--Historical Cost Basis
APPENDIX 9H-9: Review--Historical Costs as Supplementary Information
APPENDIX 9H-10: Review--Departure from GAAP, Failure to Disclose Summarized Financial Information for an Investment in a Closely Held Business
CHAPTER 10: PROPRIETORSHIPS
1000 GENERAL
1001 SEGREGATING PROPRIETORSHIP AND PERSONAL ACCOUNTS
1002 FEDERAL INCOME TAXES
1003 CASH BASIS AND TAX BASIS STATEMENTS
1004 EQUITY SECTION OF BALANCE SHEET
1005 STATEMENT OF CHANGES IN PROPRIETOR'S CAPITAL
General Requirements
Disclosure with Statement of Income
Disclosure in a Separate Statement
Disclosure in Notes to Financial Statements
1006 CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
1007 SELF-EMPLOYED RETIREMENT PLANS
1008 ILLUSTRATIVE FINANCIAL STATEMENTS
1009 SAMPLE ACCOUNTANT'S REPORTS
APPENDIX 10A: Illustrative Financial Statements for Proprietorships
APPENDIX 10A-1: Proprietorship--Compiled, Accrual Basis, Comparative Financial Statements with Full Disclosures
APPENDIX 10A-2: Proprietorship--Compiled, Income Tax Basis, Single Year Financial Statements with Disclosures Omitted
APPENDIX 10B: Compilation Reports for Proprietorships
APPENDIX 10B-1: Compilation--Proprietorship on the Accrual Basis of Accounting
APPENDIX 10B-2: Compilation--Proprietorship on the Cash Basis of Accounting
APPENDIX 10B-3: Compilation--Proprietorship on the Tax Basis of Accounting
APPENDIX 10B-4: Compilation--Proprietorship on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
APPENDIX 10B-5: Compilation--Proprietorship on Accrual Basis of Accounting, Statement of Cash Flows Omitted
APPENDIX 10B-6: Compilation--Proprietorship on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 10C: Review Reports for Proprietorships
APPENDIX 10C-1: Review--Proprietorship on the Accrual Basis of Accounting
APPENDIX 10C-2: Review--Proprietorship on the Cash Basis of Accounting
APPENDIX 10C-3: Review--Proprietorship on the Tax Basis of Accounting
APPENDIX 10C-4: Review--Proprietorship on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
CHAPTER 11: PARTNERSHIPS
1100 SELECTING AN ACCOUNTING BASIS
1101 SPECIAL ACCOUNTING TREATMENT SPECIFIED IN AGREEMENT OR HYBRID ACCOUNTING METHODS
Special-purpose Report Based on the Basis of Accounting Specified in the Partnership Agreement
Financial Statements Prepared on a Basis of Accounting Specified in the Partnership Agreement Intended for General Use
Client Interpretations of the Partnership Agreement
1102 FEDERAL INCOME TAXES
Accounting for Uncertainty in Income Tax and Partnerships
1103 STATE INCOME AND FRANCHISE TAXES
1104 GUARANTEED PAYMENTS TO PARTNERS
1105 LOANS BETWEEN PARTNERS AND THE PARTNERSHIP
1106 EQUITY SECTION OF THE BALANCE SHEET
1107 STATEMENT OF CHANGES IN PARTNERS' CAPITAL
1108 CHANGES IN PARTNERSHIP INTEREST
1109 ACCOUNTING FOR INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES
1110 ACCOUNTING FOR PARTNERSHIP RETIREMENT PLANS
1111 ILLUSTRATIVE FINANCIAL STATEMENTS AND SAMPLE ACCOUNTANTS' REPORTS FOR PARTNERSHIPS
1112 CHANGE IN LEGAL FORM OF ENTITY
1113 LIMITED LIABILITY COMPANIES
Advantages and Disadvantages of LLCs
Advantages.
Disadvantages.
Assisting Clients.
Organization
Articles of Organization.
Operating Agreement.
General Tax Treatment
Single-member LLCs.
Default Classification Rules.
Conversion of an Existing Entity to an LLC.
Accounting and Reporting Issues
Financial Statement Headings.
Federal Income Taxes.
State Income and Franchise Taxes.
Equity Section of the Balance Sheet.
Conversion of an Existing Entity to an LLC.
Comparative Financial Statements.
LLC Disclosure Requirements.
Formation of an LLC.
Disclosure of Change in Legal Form and/or Tax Status.
Illustrative Financial Statements and Sample Accountants' Reports for Limited Liability Companies.
Single-member LLCs.
1114 LIMITED LIABILITY PARTNERSHIPS
Advantages and Disadvantages of LLPs
Advantages.
Disadvantages.
LLPs Compared to LLCs.
Accounting and Reporting Issues
APPENDIX 11A: Illustrative Financial Statements
APPENDIX 11A-1: Partnership--Compiled, Income Tax Basis, Full Disclosure
APPENDIX 11A-2: Partnership--Compiled, Accrual Basis, Full Disclosure
APPENDIX 11A-3: Limited Liability Company--Compiled, Income Tax Basis, Full Disclosure
APPENDIX 11A-4: Limited Liability Company--Compiled, Income Tax Basis, Full Disclosure
APPENDIX 11B: Compilation Reports for Partnerships
APPENDIX 11B-1: Compilation--Partnership on the Accrual Basis of Accounting
APPENDIX 11B-2: Compilation--Partnership on the Cash Basis of Accounting
APPENDIX 11B-3: Compilation--Partnership on the Tax Basis of Accounting
APPENDIX 11B-4: Compilation--Partnership on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
APPENDIX 11B-5: Compilation--Partnership on Accrual Basis of Accounting, Statement of Cash Flows Omitted
APPENDIX 11B-6: Compilation--Partnership on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 11C: Review Reports for Partnerships
APPENDIX 11C-1: Review--Partnership on the Accrual Basis of Accounting
APPENDIX 11C-2: Review--Partnership on the Cash Basis of Accounting
APPENDIX 11C-3: Review--Partnership on the Tax Basis of Accounting
APPENDIX 11C-4: Review--Partnership on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
APPENDIX 11D: Compilation Reports for Limited Liability Companies
APPENDIX 11D-1: Compilation--Limited Liability Company on the Accrual Basis of Accounting
APPENDIX 11D-2: Compilation--Limited Liability Company on the Cash Basis of Accounting
APPENDIX 11D-3: Compilation--Limited Liability Company on the Income Tax Basis of Accounting
APPENDIX 11D-4: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
APPENDIX 11D-5: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
APPENDIX 11D-6: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 11D-7: Compilation--Single-member Limited Liability Company on the Accrual Basis of Accounting
APPENDIX 11E: Review Reports for Limited Liability Companies
APPENDIX 11E-1: Review--Limited Liability Company on the Accrual Basis of Accounting
APPENDIX 11E-2: Review--Limited Liability Company on the Cash Basis of Accounting
APPENDIX 11E-3: Review--Limited Liability Company on the Income Tax Basis of Accounting
APPENDIX 11E-4: Review--Limited Liability Company on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
APPENDIX 11E-5: Review--Single-member Limited Liability Company on the Accrual Basis of Accounting
1203 ILLUSTRATIONS FOR TRACKING SEPARATE RETAINED EARNINGS ACCOUNTS
Procedures for Newly Formed S Corporations
Procedures for Previous Conventional Corporations
Procedures for Previous Subchapter S Corporations
1204 EFFECT OF LOSSES ON RETAINED EARNINGS ACCOUNTS
1205 EFFECT OF TAX/BOOK DIFFERENCES ON RETAINED EARNINGS ACCOUNTS
Differences Originating after S Corporation Status Is Attained
Differences Originating before S Corporation Status Is Attained
Tax/Book Differences Existing When S Corporation Status Terminates
Tax Basis of Accounting
1206 EFFECT OF TERMINATION OF THE S CORPORATION ELECTION ON RETAINED EARNINGS ACCOUNTS
General Accounting Procedures
Tax/Book Differences and Termination
1207 COMPILATION AND REVIEW REPORTS OF S CORPORATIONS
APPENDIX 12A: Illustrative Financial Statements
APPENDIX 12B: Compilation Reports for S Corporations
APPENDIX 12B-1: Compilation--S Corporation on the Accrual Basis (Standard Report)
APPENDIX 12B-2: Compilation--S Corporation on the Cash Basis
APPENDIX 12B-3: Compilation--S Corporation on the Tax Basis
APPENDIX 12B-4: Compilation--S Corporation on the Accrual Basis, Substantially All Disclosures Omitted
APPENDIX 12B-5: Compilation--S Corporation on the Accrual Basis, Statement of Cash Flows Omitted
APPENDIX 12B-6: Compilation--S Corporation on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
APPENDIX 12C: Review Reports for S Corporations
APPENDIX 12C-1: Review--S Corporation on the Accrual Basis (Standard Report)
APPENDIX 12C-2: Review--S Corporation on the Cash Basis
APPENDIX 12C-3: Review--S Corporation on the Tax Basis
APPENDIX 12C-4: Review--S Corporation on the Accrual Basis, Statement of Cash Flows Omitted
CHAPTER 13: PRESCRIBED FORMS
1300 BACKGROUND
1301 IMPORTANT PROVISIONS OF SSARS NO. 3
Definitions
The Alternative Form of Standard Compilation Report
Departures from GAAP or from the Prescribed Form
Signing a Preprinted Report Form
1302 DETERMINING WHEN SSARS NO. 3 IS APPLICABLE
Does SSARS No. 3 Establish Different Standards for Compiling a Prescribed Form?
Is SSARS No. 3 Applicable to Review Engagements?
Is a Tax Return a Prescribed Form?
Does a Comprehensive Set of Instructions Constitute a Prescribed Form?
Is SSARS No. 3 Applicable to a Prescribed Form That Does Not Call for Departures from GAAP?
How Does a Prescribed Form Call for Departures from GAAP?
Can a SSARS No. 1 Report Be Issued Even If SSARS No. 3 Applies?
Is the SSARS No. 3 Report Appropriate When a Prescribed Form Is Presented to Other Third Parties?
1303 APPLYING SSARS NO. 3 IN PRACTICE
If a CPA Previously Compiled a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
If a CPA Previously Reviewed a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
If a CPA Previously Audited a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
If There Are Previously Issued Financial Statements, Does the CPA Have to Refer to the Previous Service in the Prescribed Form Report?
Can a CPA Attach Previously Compiled, Reviewed, or Audited Financial Statements to a Prescribed Form?
What Basis of Accounting Does a CPA Use If None Is Specified in the Form?
How Does Use of the Tax Basis or Cash Basis of Accounting Affect Financial Statements Included in Prescribed Forms?
Can an Accountant Perform a Review of Financial Statements Included in a Prescribed Form That Are Presented on a Basis Other Than GAAP?
What Does a CPA Do When Financial Statements Presented on an OCBOA Are Included in the Prescribed Form and It Uses the Terms "Balance Sheet," "Statement of Income," etc.?
What Is a CPA's Reporting Obligation for Information Presented for Supplementary Analysis Purposes?
What Is the Definition of Information Presented for Supplementary Analysis Purposes?
How Should a CPA Report on Projected Income Information Included in a Prescribed Form or as Supplementary Information to a Prescribed Form?
How Does a CPA Report on a Prescribed Form That Requires Only Elements, Accounts, or Items of a Financial Statement?
What If the Form Is in Accordance with GAAP Except for Disclosures?
Should a CPA Describe or Name the Form in the Scope Paragraph of the SSARS No. 3 Report?
How Should a CPA Report on Comparative Financial Statements Included in a Prescribed Form?
What If a CPA Is Not Independent?
Does a CPA Have to Mark "See Accountant's Compilation Report" on Each Page of the Prescribed Form?
Does SSARS No. 3 Provide the Latitude to Vary from the Wording of the Report Examples Provided?
Is SSARS No. 3 Reporting Appropriate for Prescribed Forms Submitted to the NASD or NYSE by Privately Owned Brokers or Securities Dealers?
Is SSARS No. 3 Reporting Appropriate If a Prescribed Form That Calls for GAAP Departures Is Required by a Contractual Agreement?
APPENDIX 13A: Illustrative Engagement Letter--Compilation of Financial Statements on a Prescribed Form
APPENDIX 13B: Illustrated Prescribed Form with Keyed Explanatory Notes
APPENDIX 13C: Compilation Reports on Financial Statements on Prescribed Forms
APPENDIX 13C-1: Prescribed Form Report--Standard Report on Financial Statements Included in a Prescribed Form
APPENDIX 13C-2: Prescribed Form Report--Standard Report on Personal Financial Statements
APPENDIX 13C-3: Prescribed Form Report--Personal Financial Statements, Departure from the Prescribed Form--Alternative No. 1
APPENDIX 13C-4: Prescribed Form Report--Business Entity Financial Statements, Departure from the Prescribed Form--Alternative No. 2
APPENDIX 13C-5: Prescribed Form Report--Personal Financial Statements, Departure from GAAP Not Called for by the Prescribed Form--Alternative No. 1
APPENDIX 13C-6: Prescribed Form Report--Business Entity Financial Statements, Departure from GAAP Not Called for by the Prescribed Form--Alternative No. 2
APPENDIX 13C-7: Prescribed Form Report--Personal Financial Statements, Accountant Has Compiled All Supplementary Information
APPENDIX 13C-8: Prescribed Form Report--Personal Financial Statements, Accountant Has Not Compiled Any of the Supplementary Information
APPENDIX 13C-9: Prescribed Form Report--Personal Financial Statements, Accountant Has Compiled Some, But Not All, of the Supplementary Information
APPENDIX 13C-10: Prescribed Form Report--Financial Statements Extracted from Previously Reviewed Financial Statements
APPENDIX 13C-11: Prescribed Form Report--Financial Statements Extracted from Previously Audited Financial Statements
APPENDIX 13C-12: Prescribed Form Report--Financial Statements on the Income Tax Basis
APPENDIX 13C-13: Prescribed Form Report--Financial Statements on the Cash Basis
APPENDIX 13C-14: Prescribed Form Report--Specified Elements, Items, or Accounts Included in a Prescribed Form That Does Not Contain Financial Statements
APPENDIX 13C-15: Prescribed Form Report--Comparative Financial Statements Included in a Prescribed Form
CHAPTER 14: FORECASTS, PROJECTIONS, AND SIMILAR ITEMS
1400 INTRODUCTION
How to Use This Chapter
1401 AUTHORITATIVE LITERATURE
Statement on Standards for Attestation Engagements No. 10
AT 101, Attest Engagements.
AT 301, Financial Forecasts and Projections.
Does AT 301 Require Companies to Prepare Prospective Financial Statements?
Does AT 301 Apply to Litigation Support Services?
AT 201, Agreed-Upon Procedures Engagements.
AT 401, Reporting on Pro Forma Financial Statements.
SSAE No. 13, Defining Professional Requirements in Statements on Standards for Attestation Engagements (AT 20).
SSAE No. 14, SSAE Hierarchy (AT 50).
AICPA Guide for Prospective Financial Information
SOP 89-3, Questions Concerning Accountants' Services on Prospective Financial Statements
SOP 90-1, Accountants' Services on Prospective Financial Statements for Internal Use Only and Partial Presentations
SOP 92-2, Questions and Answers on the Term Reasonably Objective Basis and Other Issues Affecting Prospective Financial Statements
1402 OVERVIEW OF GUIDANCE
What Are the Various Engagements?
Internal Use Engagements.
Plain Paper.
Written Communication.
Assembly Report.
Third-party Use Engagements.
Special Disclaimer on Budgets.
Compilation Engagements.
Agreed-upon Procedures Engagements.
Examination Engagements.
Circular 230 Engagements.
Which Engagement Is Appropriate for Your Client?
Who Is Likely to Use the Presentation?
Is It a Complete or Partial Presentation?
Flowchart to Selecting the Engagement.
Definitions and Their Impact on Your Engagement
Presentation Formats--Complete or Partial.
Types of Prospective Information--Forecasts or Projections.
Financial Forecast.
Financial Projection.
Forecast versus Projection.
General Use, Limited Use, and Internal Use.
Other Terms Used to Describe Prospective Information.
Note Disclosure Requirements
Applicability of SSARS to Prospective Information
Do Peer Reviews Apply to Engagements on Prospective Information?
Applicability of Statements on Standards for Valuation Services to Prospective Engagements
Summary of Recommendations
Engagement Understanding
Required Understanding with the Client.
Documenting the Understanding.
Third-party Use Engagements.
Internal Use Only Engagements.
Are Engagement Letters Required?
1403 KEY FACTORS AND SIGNIFICANT ASSUMPTIONS
Key Factors
Significant Assumptions
Subjective Assumptions
Assumptions for a Financial Forecast
Assessing Whether Information Is the Best Available.
Assessing Whether Assumptions Are Appropriate.
Assumptions for a Projection
1404 FORMAT AND PRESENTATION GUIDELINES
Title for a Financial Forecast
Title for a Financial Projection
Identification of the Period Presented--Forecasts and Projections
Title for Prospective and Historical Information Presented Together
Format for a Forecast or Projection
Preferred Format.
Complete Presentation.
Partial Presentation.
Significant Changes in Financial Position
Presentation of Amounts
Introduction to Summary of Significant Assumptions
Date of Preparation of Prospective Information
Summary of Significant Assumptions
Reference to the Summary of Significant Assumptions
Disclosure of Assumptions in Computer-prepared Presentations
Summary of Significant Accounting Policies
Accounting Principles
Different Basis of Accounting Used in a Prospective Presentation
Different Accounting Principles Used in a Prospective Presentation
Entity Plans to Change Accounting Principles
Presentation of Forecast with Supplemental Projection
Period to Be Covered by a Forecast or Projection
Disclosing Information about Periods beyond the Forecast Period
Correcting and Updating a Prospective Financial Presentation
Performance, Presentation, and Reporting Checklists
Illustrations
1405 PLAIN PAPER ENGAGEMENTS
Definition
Authoritative Basis for Plain Paper Engagements
Procedure, Presentation, Disclosure, and Reporting Requirements
Transmittal Letters and Other Written Communication
Workpapers for a Plain Paper Engagement
1406 ASSEMBLY ENGAGEMENTS
Assembly Procedures
Workpapers for an Assembly Engagement
Assembly Checklists.
Assembly Reports
Modifications to the Assembly Report
Assembled Prospective Presentations Shown with Compiled Historical Financial Statements
1407 SPECIAL DISCLAIMER FOR BUDGETS
1408 COMPILATION ENGAGEMENTS
Definition
Partial Presentations.
Disclosures about Periods beyond the Forecast Period.
Summary of Significant Assumptions
Performance Standards
Training and Proficiency.
Planning.
Detailed Procedures.
Workpapers for Compilation Engagements
Engagement Letter.
Illustrations of Engagement Letters.
Knowledge about the Client, Industry, and Key Factors.
Compilation Checklists.
Copy of Prospective Presentation and Related Worksheets.
List of Significant Assumptions.
Representation Letter.
When to Withdraw from a Compilation Engagement
Compilation Reports--Basic Ingredients
Modifications of the Standard Compilation Report
Omission of Significant Assumptions Not Allowed.
Summary of Significant Accounting Policies Omitted.
Presentation Deficiencies.
Report When the Presentation Contains a Measurement Departure.
Reporting on a Financial Forecast That Includes Disclosures about Periods beyond the Forecast Period
Report When the Compilation Engagement Includes Other Services
Compilation Report When OCBOA Is Not Disclosed
Compilation Report When Accountant Is Not Independent
Emphasis of a Matter in a Compilation Report
1409 AGREED-UPON PROCEDURES
1410 PARTIAL PRESENTATIONS
Definition
When Are They Appropriate?
1411 MISCELLANEOUS MATTERS
Preliminary Drafts
Prospective Information Presented along with Historical Financial Statements
Accountant-submitted Documents.
Client-prepared Documents.
Subjective Assumptions with No Reasonably Objective Basis
APPENDIX 14A-1: Abernathy Press--Historical and Forecasted Financial Statements
APPENDIX 14A-2: XYZ Company, Inc.--Summarized Financial Information
APPENDIX 14A-3: The Great Outdoors--Financial Projections
APPENDIX 14A-4: Filum-Up, Inc. (An Internal Use Forecast)
APPENDIX 14B: Checklists and Practice Aids
APPENDIX 14B-1: Internal Use Checklist--Prospective Financial Information
APPENDIX 14B-2: Compilation Procedures, Review, and Approval Form--Prospective Financial Information
APPENDIX 14B-3: Presentation and Disclosure Checklist--Forecast and Projection Engagements
APPENDIX 14B-4: Engagement Quality Control and Technical Review Form--Forecast and Projection Engagements
APPENDIX 14C: Illustrative Engagement and Representation Letters
APPENDIX 14C-1: Illustrative Engagement Letter--Assembly of a Forecast and SSARS No. 1 Compilation of Historicals
APPENDIX 14C-2: Illustrative Engagement Letter--Compilation of a Forecast
APPENDIX 14C-3: Illustrative Engagement Letter--Compilation of a Projection
APPENDIX 14C-4: Illustrative Representation Letter--Compilation of a Forecast
APPENDIX 14C-5: Illustrative Representation Letter--Compilation of a Projection
APPENDIX 14D: Reports on Prospective Presentations
APPENDIX 14D-1: Report on Assembly--Forecast
APPENDIX 14D-2: Report on Assembly--Projection
APPENDIX 14D-3: Report on Assembly--Forecast Presented Alongside Compiled Historical Financial Statements That Omit Substantially All Disclosures
APPENDIX 14D-4: Report on Compilation--Forecast
APPENDIX 14D-5: Report on Compilation--Projection
APPENDIX 14D-6: Report on Compilation--Forecast and Compiled Historical Financial Statements
APPENDIX 14D-7: Report on Compilation--Interim Historical Financial Statements Accompanied by a Financial Forecast Labeled as a Budget
CHAPTER 15: PERSONAL FINANCIAL PLANS
1500 INTRODUCTION
1501 AICPA AUTHORITATIVE LITERATURE
Approach Taken in This Chapter
Components of an Internal Use Financial Plan
Historical Personal Financial Statements
Authoritative Literature.
Engagement Letters.
The Accountant's Report.
Supplementary Information.
Prospective Personal Financial Information
What Guidance Applies to the Prospective Presentations?
Tax Advice in the Financial Plan
Authoritative Literature.
Other Advice in the Financial Plan
Authoritative Literature.
The Accountant's Report.
Management Consulting Standards.
Federal Trade Commission's (FTC's) Privacy Disclosure Rules
APPENDIX 15A: Sample Engagement Letter
APPENDIX 15B: Accountant's Report--Internal Use Financial Plan
APPENDIX 15C: Sample Privacy Notice
CHAPTER 16: ESTATES AND TRUSTS
1600 INTRODUCTION
The Need for Guidance
Additional Guidance
Key Issues
1601 DEFINITIONS AND CHARACTERISTICS
Definitions
Characteristics
1602 DOES SSARS NO. 1 APPLY?
The Answer Varies by Type of Engagement
Reporting Directly to a Court of Law
Tax Return Engagements
Is the Accountant Acting as a Public Accountant?
Reporting Options under Interpretation No. 21.
1603 WHAT IS GAAP?--A SURVEY OF EXISTING LITERATURE
GAAP for Fiduciary Accounting Is Not Clear-cut
The Uniform Principal and Income Acts
State Statutes.
Committee on National Fiduciary Accounting Standards
Fundamental Accounting Objective.
Fiduciary Accounting Principles.
Model Accounts.
Other Literature
A Recap of Emerging Principles That Can Be Categorized as GAAP
1604 REPORTING ALTERNATIVES AND BASES OF ACCOUNTING
Introduction--SSARS No. 1 Reporting
Reporting in Accordance with GAAP
GAAP Disclosure Requirements.
Departures from GAAP.
Reporting in Accordance with the Terms of an Agreement That Specifies the Basis of Accounting
Disclosure Requirements.
Other Reporting Alternatives and Bases of Accounting
Reporting on a Prescribed Form.
Reporting on the Cash Basis.
Reporting on the Income Tax Basis.
Recap of Reporting Alternatives--Basis of Accounting
Recap of Reporting Alternatives--Compilations and Reviews
1605 FINANCIAL STATEMENTS OF AN ESTATE OR TRUST
Presentation Format
Illustrative Financial Statements
APPENDIX 16A: Model Financial Statements for an Estate
APPENDIX 16B: Model Financial Statements for a Trust
APPENDIX 16C: Illustrative Financial Statements for a Trust--Income Tax Basis
APPENDIX 16D: Financial Statements Submitted to a Court of Law
APPENDIX 16E: Sample SSARS Reports
APPENDIX 16E-1: Compilation--in Accordance with GAAP
APPENDIX 16E-2: Review--in Accordance with GAAP
Continuing Professional Education
CPE & Training Solutions
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INTRODUCTORY MATERIAL
PREFACE
