Understanding SSARS No. 24: Navigating New Requirements for Compilations and Reviews

Understanding SSARS No. 24: Navigating New Requirements for Compilations and Reviews

In the ever-evolving landscape of accounting standards, the recent issuance of Statement on Standards for Accounting and Review Services (SSARS) No. 24 introduces significant amendments, reshaping the regulatory framework governing compilations and reviews. As a comprehensive omnibus statement, SSARS No. 24 aims to address various aspects of these services, ushering in changes that accountants must comprehend and apply in their professional practices. Below, we delve into key modifications brought forth by SSARS No. 24, shedding light on the implications for accountants engaged in compilations and reviews.

Key Amendments Introduced by SSARS No. 24

1. Addition of AR-C Section 100 – Special Considerations – International Reporting

SSARS No. 24 introduces AR-C Section 100, titled "Special Considerations – International Reporting," to provide guidance in scenarios involving compilations or reviews performed in specific circumstances:

  • Financial Statements Prepared in Accordance with Foreign Frameworks: This pertains to situations where financial statements adhere to a reporting framework generally accepted in another country, not endorsed by a body designated by the Council of the AICPA to establish Generally Accepted Accounting Principles (GAAP).
  • Dual Application of SSARSs and Another Set of Standards: In instances where the engagement necessitates compliance with both SSARSs and an alternative set of standards, such as international compilation or review standards.

2. Amendments to AR-C Section 60 – General Principles

AR-C Section 60, titled "General Principles," undergoes several modifications to enhance clarity and understanding. The key changes include:

  • Introduction of "Fair Presentation Framework" Definition: SSARS No. 24 incorporates a new definition for the term "fair presentation framework," aiming to provide a more precise understanding of this fundamental concept.
  • Refinement of "Financial Reporting Framework" Definition: The definition of "financial reporting framework" undergoes amendments, possibly to align it more closely with contemporary practices and standards.
  • Independence Implications for Internal Control Responsibilities: The statement explicitly clarifies that assuming responsibility for designing, implementing, and maintaining internal control for an attest client can compromise independence.

3. Amendments to AR-C Section 90 – Review of Financial Statements

AR-C Section 90, focusing on the "Review of Financial Statements," sees substantial revisions, including:

  • Procedures for Evaluating Going Concern Issues: SSARS No. 24 introduces a framework for conducting procedures related to assessing whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period. Additionally, it outlines circumstances requiring the inclusion of an emphasis-of-matter paragraph in the review report.
  • Guidelines for Significant Components Audited or Reviewed by Other Accountants: The statement lays out procedures when other accountants have audited or reviewed the financial statements of significant components within the reporting entity.
  • Consistency in Review Report Wording: A revision to paragraph .39 ensures uniformity in the required wording within the review report, aligning it with the illustrative review report presented in SSARS No. 21.

4. Effective Dates for SSARS No. 24 Revisions

With the exception of the amendment to paragraph .39 in AR-C Section 90, which takes immediate effect upon issuance, all other revisions brought about by SSARS No. 24 become applicable for compilations and reviews of financial statements for periods concluding on or after June 15, 2019.

Navigating the Implications

As accountants navigate the terrain shaped by SSARS No. 24, it becomes imperative to comprehend the nuanced implications of these amendments. The incorporation of guidelines related to international reporting reflects the global nature of modern businesses, necessitating a flexible approach to accounting standards. The emphasis on evaluating going concern issues and addressing the auditing or reviewing activities of other accountants emphasizes the commitment to robust financial reporting practices.

Furthermore, the reinforcement of independence principles, especially concerning internal control responsibilities, underscores the profession's dedication to upholding ethical standards. CPAs and accounting professionals need to assimilate these changes into their workflows, ensuring compliance with the revised standards while delivering reliable and transparent financial reporting services.

SSARS No. 24 represents a proactive response to the evolving dynamics of the accounting landscape. As the regulatory framework adapts to address contemporary challenges and international considerations, accountants must stay abreast of these changes to maintain the highest standards of professionalism and integrity in their practices. The effective incorporation of these revisions will not only ensure compliance but also contribute to the continued trust and confidence stakeholders place in the accounting profession.

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