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
exciting.