AR 200: Reporting on Comparative Financial Statements
EFFECTIVE DATE AND APPLICABILITY
| Original Pronouncement | Statements on Standards for Accounting and Review Services (SSARSs) 2, 3, 4, 5, and 7, as amended by SSARSs 11, 12, 15 and 17. |
| Effective Date | These statements currently are effective. |
| Applicability | When comparative financial statements of a nonpublic entity are presented and the current period has been compiled and reported on or reviewed in conformity with generally accepted accounting principles (GAAP) or other comprehensive basis of accounting (OCBOA). |
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NOTE: When current period financial statements of a nonissuer are audited and the prior period compiled or reviewed, the guidance in SASs applies.
This section only applies to traditional compilations, not management-use-only compilations. The guidance in this section addresses reporting requirements, and a report ordinarily is not issued in a management-use-only compilation engagement.
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DEFINITIONS OF TERMS
Comparative financial statements. Financial statements of two or more periods presented in columnar form.
Continuing accountant. An accountant who has been engaged to audit, review, or compile and report on the financial statements of the current period and one or more consecutive periods immediately prior to the current period.
Reissued report. A report issued subsequent to the date of the original report that bears the same date as the original report. A reissued report may need to be revised for the effects of specific events; in these circumstances, the report should be dual-dated with the original date and a separate date that applies to the effects of such events.
Updated report. A report issued by a continuing accountant that takes into consideration information that he becomes aware of during his current engagement and that reexpresses his previous conclusions or, depending on the circumstances, expresses different conclusions on the financial statements of a prior period as of the date of his current report.
OBJECTIVES OF AR SECTION 200
This section established standards for reporting on comparative financial statements of a nonissuer when financial statements of the current period have been compiled and reported on or reviewed. SSARS 2 was issued to provide coverage for reporting on comparative financial statements in situations when the SASs do not apply.
SSARS 11 amended SSARS 2 to allow successor accountants to name predecessor accountants if the predecessor’s practice was merged with, or acquired by, the successor accountant’s practice.
FUNDAMENTAL REQUIREMENTS
General
When comparative financial statements of a nonissuer are presented, the accountant should issue a report covering each period presented.
If the accountant becomes aware that financial statements of other periods that have not been audited, reviewed, or compiled are presented in comparative form in a document containing financial statements that he or she has reported on and the accountant’s name or report is used, the accountant should advise the client that the use of his or her name or report is not appropriate. The accountant may also wish to consult with an attorney.
The accountant should not report on comparative statements when statements for one or more of the periods, but not all, omit all or substantially all disclosures.
NOTE: Financial statements in columnar form with disclosures are comparative; financial statements that omit all or substantially all disclosures are comparative; but financial statements with disclosures are not comparative to financial statements without disclosures.
Continuing Accountant’s Standard Report
A continuing accountant who performs the same or higher level of service on the current period financial statements should update his or her report on the prior period financial statements.
A continuing accountant who performs a lower level of service (20X2 compiled, 20X1 reviewed) should either:
1. Include a separate paragraph in the report describing the responsibility for the prior period financial statements, or
2. Reissue the report on the prior period financial statements
If option 1 from the previous list is selected, the description should include the original date of the report and should state that no review procedures were performed after that date.
If option 2 is selected, the report may be:
1. A combined compilation and reissued review report (the combined report should state that no review procedures were performed after the date of the review report)
2. Presented separately
The “Illustrations” section presents example reports on comparative financial statements for the continuing accountant when:
1. Each period is compiled.
2. Each period is reviewed.
3. The current period is reviewed and the prior period is compiled.
Continuing Accountant’s Changed Reference to GAAP
The accountant should consider the effects on the prior period report of circumstances or events that came to his or her attention. When the accountant’s report contains a changed reference to a GAAP departure, the report should include a separate paragraph indicating:
1. Date of previous report
2. Circumstances or events that caused the change
3. If applicable, that the prior period financial statements have been changed
The “Illustrations” section presents an example explanatory paragraph for a changed reference to GAAP.
Predecessor’s Compilation or Review Report
A predecessor accountant is not required, but may reissue his or her report. If the predecessor’s compilation or review report is not presented, the successor should either:
1. Make reference to the predecessor’s report.
2. Perform a compilation, review, or audit of the prior period financial statements and report thereon.
If “reference to the predecessor’s report” option is selected, the successor’s reference should include:
1. A statement that the prior period financial statements were compiled or reviewed by another accountant (without identifying the predecessor by name; however, the successor may name the predecessor if the predecessor’s practice was acquired by, or merged with, the successor’s practice)
2. The date of prior accountant’s report
3. A description of the disclaimer or limited assurance report
4. A description or quotation of any report modification or emphasis paragraphs
“Illustrations” contains examples of successor paragraphs when the predecessor reviewed or compiled the prior period financial statements.
If the predecessor report is to be reissued, before reissuing the predecessor should consider:
1. The current form and presentation of the prior period financial statements
2. Subsequent events that were not previously known
3. Changes in the financial statements that might require modifications to the report.
The predecessor should also:
1. Read the current period financial statements and the successor’s report
2. Compare the prior period financial statements with the financial statements previously issued, and with the current period
3. Get a letter from the successor indicating whether he or she is aware of any matter that affects the prior period financial statements
If the predecessor becomes aware of any matter that affects the prior period financial statements, he or she should:
1. Make inquiries or perform analytical procedures similar to those that would have been applied to the information if it had been known at the report date
2. Perform other necessary procedures, such as discussing the matter with the successor or reviewing the successor’s working papers
When reissuing the report, the predecessor should use the date of the previous report. However, if the financial statements are revised, the report should be dual-dated. Also, if the financial statements are revised, the predecessor should obtain a written statement from the former client describing the new information and its effect on the prior period financial statements.
If the predecessor is unable to complete the reissue procedures described above, he or she should not reissue the report and may wish to consult with an attorney.
Changed Prior Period Financial Statements
Either the predecessor (as discussed above) or the successor should report on restated financial statements when the financial statements have been changed. If the successor reports on them, he or she should audit, review, or compile the financial statements and report accordingly. No references to the predecessor’s report should be made in the successor’s report.
Reporting When Prior Period Is Audited
The accountant should issue a compilation or review report on the current period financial statements and either:
1. Reissue the audit report on the prior period or
2. Add a separate paragraph to the current period report that includes the following information:
a. The financial statements of the prior period were audited
b. The date of the audit report
c. The type of opinion
d. Substantive reasons for other than unqualified opinion
e. No audit procedures performed after item b
“Illustrations” presents an example paragraph for the above situation.
Reporting on Financial Statements That Previously Did Not Omit All or Substantially All Disclosures
The accountant may report on comparative financial statements that omit all or substantially all disclosures even if the prior period statements were originally compiled, reviewed, or audited (with disclosures) provided that his or her report includes an additional paragraph stating the nature of the previous service and the date of the previous report. “Illustrations” presents an example report (see also the “Interpretation” section later in this chapter).
Change of Status—Issuer/Nonissuer
A previously issued compilation or review report should not be reissued or referred to in the current report if the entity is currently an issuer.
INTERPRETATION
REPORTING ON FINANCIAL STATEMENTS THAT PREVIOUSLY DID NOT OMIT SUBSTANTIALLY ALL DISCLOSURES (ISSUED NOVEMBER 1980; REVISED NOVEMBER 2002; REVISED MAY 2004; REVISED JULY 2005)
If the financial statements are compiled (disclosures omitted) from financial statements that previously did not omit disclosures, the accountant’s reference to the previous reports should include a description or quotation of any report modification or emphasis matter. If the accountant had previously audited the financial statements, then the accountant should indicate the type of opinion expressed and the reasons for doing so.
TECHNIQUES FOR APPLICATION
Client-Prepared Financial Statements Presented with Compiled or Reviewed Financial Statements
Client-prepared financial statements of some periods that have not been audited, reviewed, or compiled should not be presented in columnar/comparative format. However, they may be presented on separate pages of a document (containing financial statements that the accountant has reported on) if they are accompanied by an indication by the client (1) that they have not been compiled, reviewed, or audited, and (2) that the accountant assumes no responsibility for them.
Deciding Report Options under SSARS 2
SSARS 2 is rather complex. The following summary decision aid helps simplify the report decision process in SSARS 2. The comparative statements are for years 20X1 and 20X2.
1. If 20X2 is audited, SASs apply.
2. If the entity’s current status for 20X2 is a public company, SASs apply.
3. For continuing accountant:
a. If 20X2 level of service is equal to or higher than 20X1, update report.
b. If 20X2 is lower level of service, either refer to or reissue prior report.
4. For successor accountant:
a. If predecessor does not reissue, refer to report of predecessor or perform audit, review, or compilation of 20X1.
b. If financial statements are restated because of an error and predecessor doesn’t report on restated financials, perform audit, review, or compilation of 20X2.
ILLUSTRATIONS
The following are reports on comparative financial statements from AR Section 200.
Illustrative Compilation Reports on Comparative Financial Statements
Illustration 1. Compilation Report on Comparative Financial Statements When a Compilation Has Been Performed for Both Periods
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheets of XYZ Company as of December 31, 20X2 and 20X1, and the related statements of income, retained earnings, and cash flows for the years then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 2. Compilation Report When the Financial Statements of the Current Year Have Been Compiled and Those of the Prior Year Have Been Reviewed
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. I (We) have not audited or reviewed the 20X2 financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
The accompanying 20X1 financial statements were previously reviewed by me (us) and I (we) stated that I was (we were) not aware of any material modifications that should be made to those financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America in my (our) report dated March 31, 20X2, but I (we) have not performed any procedures in connection with that review engagement since that date.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 3. Compilation Report on Comparative Financial Statements When the Accountant’s Report Includes a Changed Reference to a Departure From Accounting Principles Generally Accepted in the United States of America
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheets of XYZ Company as of December 31, 20X2 and 20X1, and the related statements of income, retained earnings, and cash flows for the years then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
In my (our) report dated March 1, 20X2 with respect to the 20X1 financial statements, we referred to a departure from accounting principles generally accepted in the United States of America because the company carried its land at appraised values. As described in Note X, the Company has changed its method of accounting for land and restated its 20X1 financial statements to conform with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 4. Compilation Report on Comparative Financial Statements When the Prior Period Financial Statements Were Compiled by a Predecessor Accountant and the Predecessor’s Report is Not Presented
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America. The financial statements of XYZ Company as of December 31, 20X1, were compiled by other accountants whose report dated February 1, 20X2 stated that they have not audited or reviewed the 20X1 financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (our) responsibility is to conduct the 20X2 compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 5. Compilation Report on Comparative Financial Statements When the Predecessor Accountant’s Report Is Not Presented, and the Successor Accountant is Engaged to Compile the Restatement Adjustment(S)
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. I (we) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America. The financial statements prior to adjustment of XYZ Company as of and for the year ended December 31, 20X1, were compiled by other accountants whose report dated February 1, 20X2, stated that they have not audited or reviewed the 20X1 financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
I (We) also compiled the adjustments described in Note X that were applied to restate the 20X1 financial statements. I (we) have not audited or reviewed the adjustments described in Note X that were applied to restate the 20X1 financial statements and, accordingly, do not express an opinion or provide any assurance about whether the adjustments described in Note X that were applied to restate the 20X1 financial statements are in accordance with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
ILLUSTRATION 6. Compilation Report on Comparative Financial Statements When the Prior Period Financial Statements Were Audited
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
The 20X1 financial statements were audited by me (us) (other accountants) and I (we) (they) expressed an unqualified opinion on them in my (our) (their) report dated March 1, 20X2, but I (we) (they) have not performed any auditing procedures since that date.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 7. Compilation Report on Comparative Financial Statements When Prior Period Financial Statements That Omit Substantially all Disclosures Have Been Compiled from Previously Reviewed Financial Statements of the Same Period
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the accompanying balance sheets of XYZ Company as of December 31, 20X2 and 20X1, and the related statements of income, retained earnings, and cash flows for the years then ended. I (we) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.
Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the company’s financial position, results of operations, and cash flows. Accordingly, the financial statements are not designed for those who are not informed about such matters.
The 20X1 financial statements were compiled by me (us) from financial statements that did not omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America and that I (we) previously reviewed as indicated in my (our) report dated March 1, 20X2.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustrative Review Reports on Comparative Financial Statements
Illustration 1. Review Report on Comparative Financial Statements When a Review Has Been Performed for Both Periods
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheets of XYZ Company as of December 31, 20X2 and 20X1, and the related statements of income, retained earnings, and cash flows for the years then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 2. Review Report on Comparative Financial Statements When the Financial Statements of the Current Period Have Been Reviewed and Those of the Prior Period Have Been Compiled
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the 20X2 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
The accompanying 20X1 financial statements of XYZ Company were compiled by me (us). The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. Accordingly, I (we) do not express an opinion or provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 3. Review Report on Comparative Financial Statements When the Accountant’s Report Includes a Changed Reference to a Departure From Accounting Principles Generally Accepted in the United States of America
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheets of XYZ Company as of December 31, 20X2 and 20X1, and the related statements of income, retained earnings, and cash flows for the years then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
In my (our) report dated March 1, 20X2, with respect to the 20X1 financial statements, we referred to a departure from accounting principles generally accepted in the United States of America because the company carried its land at appraised values. As described in Note X, the Company has changed its method of accounting for land and restated its 20X1 financial statements to conform with accounting principles generally accepted in the United States of America. Accordingly, my (our) present statement on the 20X1 financial statements, as presented herein, that I am (we are) not aware of any material modifications that should be made to the accompanying financial statements, is different from that expressed in our previous report.
Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 4. Review Report on Comparative Financial Statements When the Prior Period Financial Statements Were Reviewed by a Predecessor Accountant, and the Predecessor’s Report Is Not Presented
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion. The financial statements of XYZ Company as of December 31, 20X1, were reviewed by other accountants whose report dated February 1, 20X2, stated that based on their procedures, they are not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the 20X2 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 5. Review Report on Comparative Financial Statements When the Predecessor Accountant’s Report Is Not Presented, and the Successor Accountant Is Engaged to Review the Restatement Adjustments
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion. The financial statements of XYZ Company as of December 31, 20X1 prior to adjustment were reviewed by other accountants whose report dated February 1, 20X2, stated that based on their procedures, they are not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the 20X2 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
I (We) also reviewed the adjustments described in Note X that were applied to restate the 20X1 financial statements. Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the adjustments described in Note X that were applied to restate the 20X1 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 6. Review Report on Comparative Financial Statements When the Prior Period Financial Statements Were Audited
Independent Accountant’s Review Report
[Appropriate Salutation]
I (We) have reviewed the accompanying balance sheet of XYZ Company as of December 31, 20X2, and the related statements of income, retained earnings, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management’s (owners’) financial data and making inquiries of company management (owners). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for our report.
Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the 20X2 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
The 20X1 financial statements were audited by me (us) (other accountants) and I (we) (they) expressed an unqualified opinion on them in my (our) (their) report dated March 1, 20X2, but I (we) (they) have not performed any auditing procedures since that date.
[Signature of accounting firm or accountant, as appropriate]
[Date]
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