Why Financial Statement Preparation is Proposed to Be a Nonattest Service
One reason why I love my position at the AICPA is because I get to meet with so many wonderful members who work so hard to make the CPA profession great. I’m always interested in discussing our new proposed standards and listening to their views about how those standards assist them in their day-to-day work.
As I traveled the country this past spring and summer, I wanted to hear how our members perceived the changes that both the AICPA’s Professional Ethics Executive Committee and the AICPA’s Accounting and Review Services Committee have proposed on a very important issue.
At the same time, ARSC issued the exposure draft, Proposed Statements on Standards for Accounting and Review Services Association With Unaudited Financial Statements; Compilation of Financial Statements; and Compilation of Financial Statements—Special Considerations, that would, among other things, amend when the compilation standard applies and what action a CPA should take when he or she has been involved in preparing financial statements but has not been engaged to perform a compilation, review or audit. Both exposure drafts have comment deadlines of Nov. 30.
As a former small firm practitioner, I think these proposed changes make perfect sense. They would allow practitioners more control in serving their clients. By far, most members in public practice I met agreed and welcomed the proposals. However, one or two members expressed confusion about the proposed changes. Some members worried about the impact the changes would have on their practice going forward. After discussing with these members the theory behind the proposed changes, the members had a much greater appreciation for them.
That’s when the “ah-ha moment” hit me. I thought, “Maybe a white paper explaining the reasons and theory behind the changes would help practitioners better understand the proposals.” So I prepared a paper, written in plain English, which is now posted to our Financial Reporting Center. I cover three key questions:
- Why is preparation currently a nonattest service?
- Why does the compilation standard need to be amended?
- What standards must be followed if a member prepares financial statements?
I hope you’ll take a few minutes to read this white paper and let me know what you think.
Charles E. Landes, CPA, Vice President of Professional Standards and Services, American Institute of CPAs.