AR 300: Compilation Reports on Financial Statements Included in Certain Prescribed Forms
EFFECTIVE DATE AND APPLICABILITY
| Original Pronouncement |
Statements on Standards for Accounting and Review Services (SSARSs) 3, 5, 7, 15, and 17. |
| Effective Date |
These statements currently are effective. |
| Applicability |
The section provides for an alternative form of standard compilation report on financial statements in prescribed forms that call for departures from generally accepted accounting principles (GAAP) or other comprehensive basis of accounting (OCBOA) by either (1) specifying a measurement principle not in conformity with GAAP, or (2) failing to request the disclosures required by GAAP. The section does not apply to tax returns or to forms designed or adopted by the client. Also, the section does not apply to review engagements or to management-use-only financial statements that are provided to clients without issuing a compilation report. |
DEFINITION OF TERM
Prescribed form. Any standard preprinted form designed or adopted by the body to which it is to be submitted—for example, forms used by banks, credit agencies, industry trade associations, or governmental and regulatory agencies.
OBJECTIVES OF AR SECTION 300
There is a presumption that the information required by a prescribed form is sufficient to satisfy the body that designed or adopted the form; thus, there is no need to call attention to departures required by the form.
FUNDAMENTAL REQUIREMENTS
General
The standards for performing a compilation as described in SSARS 1 (Section 3100) also apply to SSARS 3 engagements.
An accountant may issue either a compilation report as described in SSARS 1 or the alternative SSARS 3 report (see the section “Illustrations”).
Measurement and Disclosure Departures
The SSARS 3 report does not require GAAP measurement or disclosure departures required by the prescribed form or the instructions to the form to be identified.
Departures from GAAP that are not permitted by the form or its requirements should be described in the SSARS 3 compilation report in accordance with SSARS 1.
Preprinted Accountant’s Report
The accountant should not sign a preprinted prescribed report that does not meet the requirements of SSARS 1 or SSARS 3. Instead, the accountant should attach an acceptable report.
INTERPRETATIONS
Omission of Disclosures in Financial Statements Included in Certain Prescribed Forms (Issued May 1982; Revised February 2008)
An accountant who has reviewed financial statements of a nonissuer may issue a compilation report on financial statements for the same period in a prescribed form that calls for a departure from GAAP. When the difference between the previously reviewed financial statements and the financial statements included in the prescribed form is limited to the omission of disclosures not requested by the form, the accountant may wish to refer to the review report in the prescribed-form compilation report. If the measurement principles used in the compiled financial statements in the prescribed form cause the financial statements to be materially different from the previously reviewed financial statements, the accountant should not refer to the review engagement.
ILLUSTRATIONS
Illustrative Compilation Reports on Financial Statements Included in Certain Prescribed Forms
Illustration 1. Standard Compilation Report When the Compiled Financial Statements Are Included in a Prescribed Form That Calls for a Presentation Departure from Accounting Principles Generally Accepted in the United States of America
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the (identification of financial statements, including period covered and the name of entity) included in the accompanying prescribed form. I (We) have not audited or reviewed the financial statements included in the accompanying prescribed form 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 included in the form prescribed by (name of body) 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 compilation 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 financial statements included in the accompanying prescribed form are presented in accordance with the requirements of [name of body], and are not intended to be a presentation in accordance with accounting principles generally accepted in the United States of America.
This report is intended solely for the information and use of [the specified parties] and is not intended to be and should not be used by anyone other than these specified parties.
[Signature of accounting firm or accountant, as appropriate]
[Date]
Illustration 2. Compilation Report When the Compiled Financial Statements Are Prepared in Accordance With a Special Purpose Framework Prescribed by Contract or Regulation and That Framework Prescribes a Format for the Financial Information
Accountant’s Compilation Report
[Appropriate Salutation]
I (We) have compiled the [identification of financial statements, including period covered and the name of entity] included in the accompanying prescribed form. I (We) have not audited or reviewed the financial statements included in the accompanying prescribed form and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the basis of accounting prescribed by [describe contract or regulation].
The management (owners) is (are) responsible for the preparation and fair presentation of the financial statements included in the form in accordance with the basis of accounting prescribed by [describe contract or regulation] 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 compilation 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 financial statements included in the accompanying prescribed form are presented in accordance with the requirements of [describe contract or regulation], and are not intended to be a complete presentation of [name of entity’s] assets and liabilities.
This report is intended solely for the information and use of [the specified parties] and is not intended to be and should not be used by anyone other than these specified parties.
[Signature of accounting firm or accountant, as appropriate]
[Date]
