Name: Association with Financial Statements and SSARS Engagements - Lesson 1
Uploaded: 2017-06-23T13:09:12.000Z
Duration: 4 min 59 s
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Welcome, welcome. The next area we're gonna talk about is Statements on Standards for

Accounting and Review Services and there's all these exciting changes in this area called

SSARS. This stands for Statements on Standards for Accounting and Review Services.

These are different types of services that we can perform on a nonpublic entity. Nonpublic

is a company that's stocks, bonds are not publicly traded. So 1933, 1934 Federal Security

Regulations Act talks about basically what's considered a public company. Certain trader

on a national exchange or certain amount of assets, certain number of shareholders things

like that. In this area Statements on Standards for Accounting

Review Services, basically what we're looking at is we're saying that a CPA can be associated

with financial statements for different types of engagements. Now there used to be two engagements,

reviews in compilations then under the ARSC, Accounting Review Services Committee by the

AICPA, they said you know what, let's restructure this because there's too much confusion because

we know that in an audit. Remember we've talked about an audit. We are

giving an opinion, an audit report. In our opinion the statements refer to above and

blah, blah, blah. That's looking at either public or nonpublic companies but there you're

giving something called positive assurance then we have other situations where we're

given what we call limited or negative assurance. We have situations where we're giving no assurance

and people in the past would look at a compilation where you're giving no assurance and they

would think that it meant more than it really did. We came out with these rules in order

to really clarify that's why it's called Clarified Standards.

If you think back, remember we talked about the Clarified Standards for auditing for basic

doing an audit. Same thing here they wanted to come up with these Clarified Standards

to look similar to the ASB, Auditing Standards Board Rules but here this relates to statements

on Standards for Accounting Review Services. This relates to different types of services

that we can perform. The main reason too is to make it easier to read, to understand and

to apply the rules. Therefore, these rules we're talking about now relate for example

to nonpublic entities. What we're gonna be looking at under SSARS

are three different types of engagements and let me give you a quick overview of where

we're gonna be going. Hang on to your seats and then we'll go into the detail, nitty-gritty

detail of looking at the reports and so on. Let's come on over, what we're looking at

is SSARS, three different types of engagements. This one is called the preparation of financial

statements. It's gonna be covered by ARC 70 and what's happening here is in the past someone

would ask us, "Hey, can you prepare some financial statements for me that someone else is going

to audit, review, or compile." Well we didn't really have any standards that told us how

to do it that's why we created these under ARC 70 is preparation of financial statements.

Basically, it says, hey, you're using QuickBooks and someone wants you to print out these financial

statements that someone else is going to do work on. That would be covered by SSARS. If

you're gonna prepare the statements and then you're gonna do the work, it's not covered

because the work itself would be covered under SSARS.

But if you're gonna prepare the statements given to someone else to do then we have certain

standards that say "Hey, here's what you're gonna do." We have a compilation where in

this case we're giving no opinion no assurance, however, we're assembling or compiling these

things in the form of financial statements. We have to read them and do a little bit more

work here so you'll see in a few minutes what has to happen here as far as what kind of

work we're gonna have to do is understanding and reading as well so we'll look at that

later. Over here is a review and what's happening

with the review, now you're giving some sort of limited or negative assurance because in

this case we're saying, "Hey, I didn't do an audit but I'm not aware of any problems

with these statements." You're not saying that they're not perfect, hey, because they're

far from perfect. The only thing perfect, my wife, ask her. But they're not perfect,

however, we're giving limited or negative assurance saying, "I can't say it happened

but I'm not aware of any adjustments or modifications in order for these statements to be in conformity

with that financial reporting framework or GAAP or OCBOA," or whatever framework we're

using which we'll talk about later. What happened here is now we have standards

that tell us how to prepare these statements so someone can work on them. Here we're saying

that the old report used to have three paragraphs. The new report is gonna be one paragraph because

with three paragraphs it made it look like we were getting some assurance when we really

weren't. Here, reviews change very lightly but they gone into a little bit more detail,

clarification a little bit more and changing a few rules and making certain things requirements.

That's where we're gonna be going over the next several minutes and it's pretty darn