Level of Services Provided by a CPA – The Differences Between Compilations, Reviews, and Audits

January 29, 2013, 9:42 am

There are three different levels of services you could obtain from a certified public accountant.  These are referred to as compilation, review, and audit.

Financial statements are presented on the basis of some set of accounting rules. This is referred to as the financial reporting framework.

The vast majority of the time, this would be a large body of knowledge that is called generally accepted accounting principles, or GAAP. Imperfect in implementation though it may be, the concept is that similar transactions will be recorded by all organizations in the same way. In addition, financial statements of similar organizations will actually look similar.

If there is some unique reason to do so, the financial statements could be presented on another basis of accounting.

Compilation

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Evaluating a used car as an illustration of the differences between compilation, review, and audit

May 10, 2012, 6:47 am

You could figure out how good a car is by looking at it from across the street. 

Or you could look inside & drive it around the block. 

Or you could take the car to your mechanic for a couple of hours to get it really checked out .

We can use that as an analogy of the differences between a compilation, a review, and an audit.

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Sample compilation and review reports under SSARS 19 for NPOs

March 25, 2012, 5:34 pm

Here is a list of the sample reports under SSARS available on my blogs. The samples are available on this blog as well as my other blog, Attestation Update. (These links go to the other blog.)


Filling up a bucket – word picture for levels of assurance in audit, review, and compilation

September 10, 2011, 9:16 am

     

(cross-post from my other blog, Attestation Update.)

In a webcast on August 31, 2011, Mr. Michael Glynn, CPA, of the AICPA staff, gave a wonderful word picture of the levels of assurance in a review and audit.  Here’s his idea:  Filling up a bucket with procedures produces different levels of assurance.  I would like to expand Mr. Glynn’s description and provide an illustration.

  • In an audit, the accountant obtains provides reasonable assurance that there are no material errors in the financial statements.
  • In a review, the accountant obtains provides limited assurance that there are no material errors in the financial statements.
  • In a compilation,the accountant does not obtain provide any assurance that there are no material errors in the financial statements.

Notice the similarity and difference?  The overlap between these definitions is how much assurance the accountant obtains for himself or herself provides that there are no material errors in the financial statements.

The differences? Read the rest of this entry »


Two more CPE classes on SSARS are available

August 28, 2011, 8:42 pm

Earlier this year I wrote a CPE course on SSARS requirements for CCH . Back in April I mentioned Compilation and Review: Practice Issues (Third Edition) was available. Discussed that course here.  Two more SSARS classes I wrote are now online.  Another will be available soon.  Each of the following classes are two CPE hours.

Compilation and Review: IntroductionCourse description from CCH:

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Compilation and Review: Practice Issues (Third Edition) CPE course now available online

April 25, 2011, 5:22 pm

I have written a 3-hour online CPE course called Compilation and Review: Practice Issues (Third Edition). It is now available at the CCH Learning Center website.

Here’s what the course covers, from the CCH site:

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4 posts on how to deal with possible fraud and illegal acts under SSARS 19

April 13, 2011, 8:27 am

I have four posts up at Attestation Update discussing how SSARS 19 says the accountant should deal with possible fraud and illegal acts encountered while performing compilations and reviews.

Click on any of the following links that look like a good place to start:

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Going concern issues under SSARS 19

March 30, 2011, 9:35 am

I have two posts at Attestation Update explaining how to address going concern issues under SSARS 19.  The guidance found in SSARS 19 is rather brief.  Here are the posts:

I won’t cross-post those comments to this blog.  Please click the links above to read the discussion.


Posts on documentation requirements from SSARS #19 combined into a page

February 21, 2011, 7:41 am

I have written a series of eight posts on the documentation rules for reviews and comps from SSARS 19 on my other blog, www.attestationupdate.com.  Those posts have been combined into a single ’page’.  This means you can read all the posts in chronological order, which also means they are in logical order.  Click here for the page.


CPE class on SSARS, written by Jim Ulvog – arriving soon!

February 4, 2011, 3:50 pm

I have written an on-line CPE course on SSARS called Compilation and Review: Practice Issues.  It is a 3 hour course covering a variety of practice issues for CPAs providing comps and reviews.  It is written at the overview level. 

Arriving soon at the CCH Learning Center.  When it is available on-line, I’ll give more detail and a link to the course.

I wrote the course in a little more casual voice that you might expect to see in a technical class, but not quite as casual as you see on this blog.  If you enjoy the style of writing you see here, you might enjoy the online CPE.

More detail to follow!

Update:  3-hour online CPE course called Compilation and Review: Practice Issues (Third Edition) is now available at the CCH Learning Center website.  Course discussed in more detail at this post.


Documentation requirements under SSARS 19

January 31, 2011, 12:10 pm

I have started a series of posts on my other blog discussing the documentation requirements under SSARS 19 for compilations and reviews.  I won’t be cross-posting those discussions on this blog.  The first item is here.

Update – Discussions of reviews start here.


Engagement quality control reviews for attestation engagements

January 25, 2011, 8:05 am

Welcome to the CPAs arriving here from an internet search.  This post is just for the CPAs in my audience. 

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Is an engagement letter required for a compilation or review?

January 18, 2011, 5:29 pm

I have a post up on my other blog addressing this question. You can find it here, since I won’t be cross posting the entry.


Lack of independence in a compilation

January 4, 2011, 7:48 am

At my other blog, I have a post discussing the option to explain the reasons for an accountant’s lack of independence in a compilation.  Also have a poll to survey readers whether they plan to use this option.  I don’t plan to cross-post those two discussions, so please click on the link to see the post.


What questions do you have on reviews and compilations?

January 3, 2011, 1:07 pm

Greetings to the all the accountants arriving here after doing a search on reviews and compilations!  Hope the posts here are of help to you.

What other questions do you have on SSARS 19? Let me know in the comments and I’ll try to help!

Happy New Year and best wishes as you implement the new stuff in SSARS 19!


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