“SSARS 21” is a somewhat complicated professional standard, but Beth Friswold, CPA breaks it down for you:
Here’s some background to SSARS 21, a new professional standard that can all you to select a new level of service for your financial statements: In October 2014, the Accounting and Review Services Committee of the American Institute of Certified Public Accountants (AICPA) issued Statements on Standards for Accounting and Review Services (SSARS) No. 21: Clarification and Recodification. This superseded most of the outstanding SSARS with the exception to SSARS No. 14 Compilation of Pro Forma Financial Information, as amended which is currently in redraft and will be issued separately.
You are likely wondering how this is relevant to you. Most of SSARS No. 21 relates to how your CPA performs compilation, review and preparation services behind the scenes. However, for business owners, there are perks pertaining to your financial reporting options. Here are some specifics of SSARS No. 21:
- Allows your CPA to provide you an entirely new service, “prepared” financial statements. Great for interim financial statements, prepared statements are a useful tool for management’s analysis that can be provided quickly by your CPA.
- Prepared financial statements are not required to be in accordance with generally accepted accounting principles (GAAP) – which allows your management team to have access to financial statements that are tailored to their needs (e.g. cash basis, income-tax basis, etc.)
- Your CPA will not provide any assurance or opinion (i.e. a report) on prepared financial statements, and although they are available for third-party reporting, you will want to discuss this with your CPA and the third-party first.
- Prepared financial statements can be generated directly from your electronic or cloud-based accounting software.
- Similar to previous engagements with your CPA, they will provide you with an engagement letter that defines the terms of the engagement.
Overall, the standard has modernized reporting options to fit the needs of today’s financial statement users. Use this new option to get prepared financial statements, which may help you obtain timely financial reporting!