welcome, welcome. the next area we're gonnatalk about is statements on standards for accounting and review services and there'sall these exciting changes in this area called ssars. this stands for statements on standardsfor accounting and review services. these are different types of services thatwe can perform on a nonpublic entity. nonpublic is a company that's stocks, bonds are notpublicly traded. so 1933, 1934 federal security regulations act talks about basically what'sconsidered a public company. certain trader on a national exchange or certain amount ofassets, certain number of shareholders things like that.in this area statements on standards for accounting review services, basically what we're lookingat is we're saying that a cpa can be associated
with financial statements for different typesof 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 restructurethis 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 ouropinion the statements refer to above and blah, blah, blah. that's looking at eitherpublic or nonpublic companies but there you're giving something called positive assurancethen 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 compilationwhere you're giving no assurance and they
would think that it meant more than it reallydid. we came out with these rules in order to really clarify that's why it's called clarifiedstandards. if you think back, remember we talked aboutthe clarified standards for auditing for basic doing an audit. same thing here they wantedto come up with these clarified standards to look similar to the asb, auditing standardsboard 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 isto make it easier to read, to understand and to apply the rules. therefore, these ruleswe'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 andlet me give you a quick overview of where we're gonna be going. hang on to your seatsand 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 70and what's happening here is in the past someone would ask us, "hey, can you prepare some financialstatements for me that someone else is going to audit, review, or compile." well we didn'treally have any standards that told us how to do it that's why we created these underarc 70 is preparation of financial statements. basically, it says, hey, you're using quickbooksand someone wants you to print out these financial
statements that someone else is going to dowork on. that would be covered by ssars. if you're gonna prepare the statements and thenyou're gonna do the work, it's not covered because the work itself would be covered underssars. but if you're gonna prepare the statementsgiven to someone else to do then we have certain standards that say "hey, here's what you'regonna 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 whathas to happen here as far as what kind of work we're gonna have to do is understandingand 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 sortof limited or negative assurance because in this case we're saying, "hey, i didn't doan audit but i'm not aware of any problems with these statements." you're not sayingthat 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 negativeassurance saying, "i can't say it happened but i'm not aware of any adjustments or modificationsin order for these statements to be in conformity with that financial reporting framework orgaap 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 statementsso 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 likewe were getting some assurance when we really weren't. here, reviews change very lightlybut they gone into a little bit more detail, clarification a little bit more and changinga few rules and making certain things requirements. that's where we're gonna be going over thenext several minutes and it's pretty darn exciting.
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