A new day: SSARS 19 ushers in new compilation review standards.

• Author: Scott, Thad
• Position: Statements on Standards for Accounting and Review Services

When it comes to the new compilation and review standards in SSARS 19, there are two major questions:

What do we need to know?

By when do we need to take action?

Implementation Dates

The new standard is effective for compilation and review reports issued on financial statements for periods ending on or after Dec. 15, 2010. Early implementation is not allowed except for changes that affect reports that the accountant is not. independent. The accountant is now allowed to disclose in the report the reasons for nonindependence.

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Major Issues

This compilation and review standard contains the most significant changes since 1978. It affects all of us that issue any compilation and review reports on financial statements. It also could have a significant affect on your peer review.

Non-Independent Reports

Reports now can disclose why the accountant is not independent. CPAs always had been permitted to perform compilations when not independent but were prohibited from including in the report an explanation regarding the lack of independence.

As of Jan. 2010, those of us who issue compilation reports that state we are not independent have the option to include the reasons why we are not independent.

The following are some general rules, and it is suggested that if" you are planning on utilizing this standard, be sure you have appropriately researched the application of the new standard:

* Again, stating in the report why we are not independent is optional.

* We do not have to always state why we are not independent once we have done it. It can be done on any, but not all, reports issued for a client from now on.

* There is no standard wording for the nonindependence reasons, though SSARS 19 gives examples, including:

1. I had a direct financial interest in the company.

2. An individual of my immediate family was employed by the company

3. I performed certain accounting services (may include a specific description of services) for the company

* All of the reasons for nonindependence must be stated.

* This standard is applicable for compilations only Review reports have been excluded at this time. However, watch for future standard changes that may affect review reports.

All Compilation/Review Reports

Mandatory engagement letters for all compilation and review engagements are required. The standard offers examples of these.

* Documentation requirements for both compilations and reviews. This is a major change. For compilations, the...