1. Levels of service

CPAs can perform three levels of service with respect to unaudited financial statements of a nonissuer.

1. Preparation

2. Compilation

3. Review

2. Professional standards

2.1. Statements on Standards for Accounting and Review Services (SSARS)

The Accounting and Review Services Committee of the AICPA issues pronouncements for unaudited financial statements of nonissuers. The pronouncements issued are known as Statements on Standards for Accounting and Review Services, or SSARS.

An accountant should:

1. have sufficient knowledge to identify applicable SSARS;

2. exercise professional judgment in applying SSARS; and

3. be able to justify departures from SSARS.

2.2. SSARS Applicability

An accountant who is engaged to prepare, compile, or review unaudited financial statements of a nonissuer should comply with SSARS. SSARS also apply to:

• engagements in which the accountant is engaged to prepare, compile or review specified elements, accounts, or items of a nonissuer's financial statements, or

• engaged to prepare or compile proforma financial information of a nonissuer.

2.3. SSARS do not apply to

• Other accounting services: preparing one or a few adjusting or correcting entries, consulting on financial matters, preparing tax returns, rendering manual or automated bookkeeping or data processing services, and processing financial data for clients of other accounting firms.

• Reviews of interim financial statements: Statements on Auditing Standards (SAS) apply here.

3. Elements of SSARS engagements

1. Three-party relationship: Management, the accountant, and the users of the financial information.

2. Establish an understanding with the client: All SSARS engagements require a written agreement.

3. Other frameworks: Frameworks beside GAAP and IFRS may be used to prepare financial information in SSARS engagements.

4. Financial statements or information: Doesn't need to be a complete set of statements or even an entire singular statement.

4. Subsequent events

• The accountant should request that management consider whether each subsequent event is appropriately reflected in the financial statements in accordance with the applicable financial reporting framework.

5. Reporting fraud and noncompliance with laws and regulations

If an accountant becomes aware that fraud or noncompliance with laws and regulations may have occurred, such matters should be communicated to an appropriate level of management.