Guide. Preparation, Compilation, and Review Engagements, 2019. Edition No. 2. AICPA

Table of Contents

1 Review of Financial Statements .01-.241

Introduction .01-.03

Applicability .04

Consideration of Materiality in a Review Engagement .05-.11

Requirements .12-.236

General Principles for Performing and Reporting on Review Engagements .12

Professional Skepticism in a Review Engagement .13-.16

Engagement Level Quality Control in a Review Engagement .17-.21

Independence .22-.24

Preconditions for Accepting a Review Engagement .25-.30

Communications with Predecessor Accountants .31-.34

Agreement on Engagement Terms .35-.38

Understanding of the Industry .39

Knowledge of the Entity .40-.68

Designing and Performing Review Procedures .69-.72

Analytical Procedures .73-.113

Illustrative Analytics .114-.119

Inquiries and Other Review Procedures .120-.147

Illustrative Inquiries .148-.149

Reading the Financial Statements .150-.152

Reconciling the Financial Statements to the Underlying Accounting Records .153

Evaluating Evidence Obtained From the Procedures Performed .154-.157

Written Representations .158-.164

Communicating to Management and Others Regarding Fraud or Noncompliance with Laws and Regulations .165-.172

Reporting on the Financial Statements - General .173-.174

Reporting on Financial Statements Prepared in Accordance with a Special Purpose Framework .175-.179

Reporting on Comparative Financial Statements .180-.186

Reporting on Known Departures From the Applicable Financial Reporting Framework .187-.192

Emphasis-of-Matter and Other-Matter Paragraphs in the Accountant’s Review Report .193-.197

Alert That Restricts the Use of the Accountant’s Review Report .198-.201

Reporting on Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country .202-.205

The Accountant’s Consideration of an Entity’s Ability to Continue as a Going Concern .206-.207

Consideration of the Effects on the Accountant’s Review Report .208-.209

Subsequent Events and Subsequently Discovered Facts .210-.216

Initial Review Engagements - Opening Balances .217-.219

Reference to the Work of Other Accountants in an Accountant’s Review Report .220-.222

Supplementary Information That Accompanies Reviewed Financial Statements .223-.225

Required Supplementary Information .226-.228

Change in Engagement From Audit to Review .229-.233

Review Documentation .234-.236

Illustrative Engagement Letters .237

Illustrative Representation Letter .238-.240

Illustrative Accountant’s Review Reports on Financial Statements .241

2 Compilation of Financial Statements .01-.103

Introduction .01-.02

Applicability .03

Requirements .04-.87

General Principles for Performing and Reporting on Compilations of Financial Statements .04

Engagement Level Quality Control in a Compilation Engagement .05-.09

Independence .10-.11

Preconditions for Accepting a Compilation Engagement .12-.17

Agreement on Engagement Terms .18-.21

Knowledge and Understanding of the Entity’s Financial Reporting Framework .22-.26

Reading the Financial Statements .27

Other Compilation Procedures .28-.35

Reporting - General .36-.37

Reporting - Financial Statements Prepared in Accordance with a Special Purpose Framework .38-.41

Reporting - Financial Statements that Omit Substantially All the Disclosures Required by the Applicable Financial Reporting Framework .42-.50

Reporting - Comparative Financial Statements .51-.63

Reporting - When the Accountant is Not Independent .64-.66

Reporting - Known Departures From the Applicable Financial Reporting Framework .67-.72

Reporting - Supplementary Information That Accompanies Financial Statements and the Accountant’s Compilation Report Thereon .73-.75

Reporting - Required Supplementary Information .76-.78

Reporting - Alert That Restricts the Use of the Accountant’s Compilation Report .79-.80

Reporting - Emphasis-of-Matter or Other-Matter Paragraphs .81

Reporting - Financial Statements Prepared in Accordance with a Prescribed Format .82-.87

Compilation of Specified Elements, Accounts, or Items of a Financial Statement .88-.91

Change in Engagement From Audit or Review to a Compilation Engagement .92-.97

Documentation Requirements .98-.100

Illustrative Engagement Letters .101

Illustrative Examples of the Accountant’s Compilation Report on Financial Statements .102

Exhibit - Compilation Reporting Requirements When Independence is Impaired .103

3 Preparation of Financial Statements .01-.50

Introduction .01

Applicability .02-.07

Independence .08-.09

Requirements .10-.49

General Principles for Performing Engagements to Prepare Financial Statements .10

Engagement Level Quality Control in an Engagement to Prepare Financial Statements .11-.15

Preconditions for Accepting an Engagement to Prepare Financial Statements .16-.18

Agreement on Engagement Terms .19-.22

Knowledge and Understanding of the Entity’s Financial Reporting Framework .23-.27

Preparing the Financial Statements .28-.34

Preparation of Financial Statements in Accordance with a Special Purpose Framework .35-.36

Preparation of Financial Statements That Contain a Known Departure or Departures From the Applicable Financial Reporting Framework .37-.38

Preparation of Financial Statements That Omit Substantially All Disclosures Required by the Applicable Financial Reporting Framework .39-.41

Preparation of Financial Statements Included in a Prescribed Form .42-.44

Communication with Management .45-.46

Documentation Requirements .47-.49

Illustrative Engagement Letters .50

4 Compilation of Pro Forma Financial Information .01-.24

Introduction .01

Applicability .02-.03

Requirements .04-.22

General Principles for Compilations of Pro Forma Financial Information .04-.06

Acceptance and Continuance of Client Relationships .07-.09

Agreement on Engagement Terms .10-.13

The Accountant’s Knowledge and Understanding of the Entity’s Financial Reporting Framework .14

Compilation Procedures .15-.16

The Accountant’s Compilation Report on Pro Forma Financial Information .17-.20

Documentation .21-.22

Illustrative Engagement Letter for a Compilation of Pro Forma Financial Information .23

Illustrative Accountant’s Compilation Report on Pro Forma Financial Information .24

5 Preparing or Performing a Compilation or Review of Personal Financial Statements .01-.26

Introduction .01

Accounting Considerations .02-.05

Internal Control with Respect to Personal Financial Statements .06-.08

Agreement on Engagement Terms .09-.11

Fraud and Illegal Acts in an Engagement to Prepare or in a Compilation or Review of Personal Financial Statements .12-.14

Representation Letters .15-.17

Compilation and Review Reports on Personal Financial Statements .18-.20

Departures From the Applicable Financial Reporting Framework .21-.22

Illustrative Engagement Letters .23

Illustrative Representation Letter .24-.25

Illustrations of Accountant’s Compilation and Review Reports on Personal Financial Statements .26

6 Special Considerations - International Reporting Issues .01-.26

Introduction .01-.02

Applicability .03-.04

Requirements .05-.24

Considerations When Accepting the Engagement .05-.09

Compilation or Review of Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country .10-.13

Application of Another Set of Compilation or Review Standards .14-.16

Reporting .17-.24

Illustrative Examples of the Accountant’s Compilation and Review Report on Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country Performed in Accordance with SSARSs and Another Set of Compilation or Review Standards .25

Exhibit - Incremental Procedures Required to be Performed if a Review is to be Conducted in Accordance with SSARSs and International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements .26

Appendix A Overview of Statements on Quality Control Standards

Glossary

Index of Pronouncements and Other Technical Guidance

Subject Index