Compilation and Review Engagements -- SSARS No. 19

This Standard:

• Introduces the term review evidence to the review literature by clarifying that a review requires the accumulation of review evidence that will provide a reasonable basis for obtaining limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in accordance with the applicable financial reporting framework. The standard states analytical procedures and inquiries will ordinarily provide the appropriate evidence but that the accountant should use professional judgment in determining the specific procedures.
• Includes a discussion of materiality in the context of a review engagement
• Includes a requirement that an accountant document the establishment of an understanding with management through a written communication (that is, an engagement letter) regarding the services to be performed for all SSARSs engagements
• Enhances the documentation requirements for compilation and review engagements
• Removes the prohibition against allowing an accountant to include a description in the accountant’s compilation report regarding the reason(s) for an independence impairment
• Recodifies the SSARS literature into separate sections for compilation and review engagements

The effective date is for compilations and reviews of financial statements for periods ending on or after Dec. 15, 2010. Early application is allowed with respect to permitting an accountant to disclose the reasons for a lack of independence in a compilation report.

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