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PPC's Guide to Compilation and Review Engagements

PPC's Guide to Compilation and Review Engagements

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Compilation and review engagements require comprehensive, up-to-date reference resources to help you ensure that you're complying with the latest accounting standards. PPC's Guide to Compilation and Review Engagements contains hundreds of practice aids, sample reports, sample disclosures, and financial statements to help you perform your engagements correctly and with maximum efficiency.

Dozens of timesaving tools will ensure you'll stay in compliance with professional standards and peer review requirements, reducing your risk of non-compliance. You’ll be able to address nearly every situation you might encounter in a review or compilation engagement and have critical information and tools at hand, including:

  • The basics of compilation and review services
  • In-depth guidance for specific entities and unique engagements, such as personal financial statements and nonprofit organizations
  • Streamlined forms and checklists
  • Engagement and management representation letters
  • Accountant's reports and procedure checklists
  • Discussions to help you understand new accounting requirements

 
Authored by respected experts with decades of practice experience, PPC's Guide to Compilation and Review Engagements has been regarded as the authority for compilation and review engagements for more than 30 years.

List of Content (Click any title to expand the list)

  • INTRODUCTORY MATERIAL
    • PREFACE
    • PEER REVIEW OF THIS GUIDE
    • HOW TO USE THE GUIDE
    • ACKNOWLEDGMENTS
    • ACKNOWLEDGMENT OF COPYRIGHTS
    • ABOUT THE AUTHORS . . .
    • LIST OF SUBSTANTIVE CHANGES AND ADDITIONS
  • CHAPTER 1: BACKGROUND INFORMATION
    • 100 THE ACCOUNTING AND REVIEW SERVICES COMMITTEE
      • What Is Its Purpose?
      • What Is Its Scope?
      • What Is Its Authority?
      • How Is It Structured?
      • How Does It Speak?
      • SSARS Interpretations
      • AICPA Compilation and Review Guide
      • SSARS Exhibits
      • Technical Practice Aids (TIS 9150)
    • 101 AR SECTION 60--FRAMEWORK FOR REPORTING ON COMPILATION AND REVIEW ENGAGEMENTS
    • 102 AR SECTION 80--COMPILATION OF FINANCIAL STATEMENTS
    • 103 AR SECTION 90--REVIEW OF FINANCIAL STATEMENTS
    • 104 AR SECTION 110--COMPILATION OF SPECIFIED ELEMENTS, ACCOUNTS, OR ITEMS OF A FINANCIAL STATEMENT
    • 105 AR SECTION 120--COMPILATION OF PRO FORMA FINANCIAL INFORMATION
    • 106 AR SECTION 200--REPORTING ON COMPARATIVE FINANCIAL STATEMENTS
    • 107 AR SECTION 300--COMPILATION REPORTS ON FINANCIAL STATEMENTS INCLUDED IN CERTAIN PRESCRIBED FORMS
    • 108 AR SECTION 400--COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR ACCOUNTANTS
    • 109 AR SECTION 600--REPORTING ON PERSONAL FINANCIAL STATEMENTS INCLUDED IN WRITTEN PERSONAL FINANCIAL PLANS
    • 110 RECENT SSARS DEVELOPMENTS
      • ARSC Developments
        • New Compilation and Review Interpretations on Required Supplementary Information.
        • Technical Practice Aid TIS 9150.29, Effects on Compilation and Review Engagements When Management Does Not Assess Whether the Reporting Entity Is the Primary Beneficiary of a Variable Interest Entity and Instructs the Accountant to Not Perform the Assessment.
        • Technical Practice Aid TIS 9150.30, Disclosure of Independence Impairment in the Accountant's Compilation Report on Comparative Financial Statements When the Accountant's Independence Is Impaired In Only One Period.
        • Proposed Clarified SSARS, Association With Unaudited Financial Statements.
        • Clarified SSARS, Compilation of Financial Statements, Exposure Draft.
        • Proposed clarified SSARS, Review of Financial Statements.
      • AICPA's Compilation and Review Alert
      • SSARS 19 Toolkit
    • 111 RECENT ACCOUNTING DEVELOPMENTS
    • 112 INTERNATIONAL COMPILATION AND REVIEW STANDARDS
      • Interaction with SSARS
    • 113 THE IMPACT OF THE CURRENT ECONOMIC ENVIRONMENT ON COMPILATIONS AND REVIEWS
      • Fair Value Measurements and Disclosures
        • Authoritative Literature.
      • Accounting Considerations
        • Receivables.
        • Inventories.
        • Goodwill and Other Intangible Assets.
        • Long-lived Assets.
        • Declines in the Fair Value of Marketable Securities.
        • Troubled Debt Restructurings.
        • Exit or Disposal Activities and Discontinued Operations.
      • Liquidation of the Company
      • Disclosure Considerations
        • The Ability of the Company to Continue as a Going Concern.
        • Disclosure of Subsequent Events.
        • Disclosure of Commitments, Contingencies, Risks, and Uncertainties.
        • Commitments.
        • Contingencies.
        • Risks and Uncertainties.
    • APPENDIX 1A: Comparison of Compilation, Review, and Audit Engagements
    • APPENDIX 1B: Accounting Standards Recently Issued or Soon to be Effective
  • CHAPTER 2: ENGAGEMENT ADMINISTRATION
    • 200 CLIENT ACCEPTANCE AND CONTINUANCE
      • Prospective Client's Integrity
        • Factors to Consider When Evaluating Integrity.
        • Sources of Information.
      • Evaluating Firm Competence, Capabilities, and Resources
      • Compliance With Legal and Ethical Requirements
        • Legal and Regulatory Requirements.
        • Ethical Requirements.
      • Continuing Clients
      • Significant Issues Discovered in the Acceptance or Continuance Process
    • 201 DOES SSARS NO. 19 APPLY TO THIS ENGAGEMENT?
      • Scope of SSARS No. 19
      • Accounting Services
        • Preparing a Working Trial Balance.
        • Assisting in Adjusting the Books of Accounts and/or Consulting on Accounting Matters.
        • Tax Returns as Financial Statements.
        • Medicare/Medicaid Cost Reports as Financial Statements.
        • Providing Automated Accounting Services without Preparing Financial Statements.
      • Submitting Financial Statements
        • Introduction.
        • Definition of Submission.
        • Preparing Financial Statements.
        • Presenting Financial Statements.
        • Determining Whether You Have Submitted.
        • Illustrative Scenarios.
        • When SSARS Applies.
        • Summary.
      • Other SSARS Applicability Questions
        • Financial Statements Submitted by a CPA as an Owner, Director, Officer, or Employee.
        • Preparing and Presenting (Submitting) Financial Statements Electronically.
        • Financial Statements Submitted Electronically to State or Federal Agencies.
        • Specified Elements, Accounts, or Items of a Financial Statement.
        • Compliance with Aspects of Contractual Agreements or Regulatory Requirements.
        • Preparation of Financial Statements for Use by the Entity's Auditors.
        • Other Issues.
      • What SSARS No. 19 Requires
    • 202 RECOMMENDING A LEVEL OF SERVICE
      • Needs of Users
        • Needs of Management.
        • Needs of External Users.
      • Need for Comparative Financial Statements
      • Alternatives to Full Disclosure GAAP Financial Statements
        • Issuing Management-use-only Financial Statements.
        • Providing Monthly Reports Containing Only Selected Financial or Operational Information.
        • Compiling Financial Statements That Omit Substantially All Disclosures.
        • Compiling OCBOA Financial Statements.
        • Compiling Financial Statements That Have Measurement Departures.
        • Soft Close.
      • Independence
      • Commissions, Referral Fees, and Contingent Fees
    • 203 ENGAGEMENT LETTERS
      • Introduction
      • Why Engagement Letters?
      • Overcoming Client Resistance
      • Engagement Letters When Reporting on Compiled Financial Statements
      • Engagement Letters When the Financial Statements Are for Management-use-only
        • Additional Matters to Include in the Letter.
      • Engagement Letters When Reporting on Reviewed Financial Statements
      • Engagement Letters When Reporting on Specified Elements--SSARS No. 13
      • Engagement Letters When Reporting on Pro Forma Information--SSARS No. 14
      • Risk of One-way Communication
      • Period Covered by the Engagement Letter
      • Using Engagement Letters to Minimize Liability
      • Additional Engagement Letter Provisions for Limiting a Firm's Liability
        • Undertaking-to-be-truthful Clauses.
        • Alternative Dispute Resolution.
        • Specifying a Time Limitation.
        • Considerations When Using Engagement Letter Clauses.
      • Informing Clients of Outsourcing Arrangements
    • 204 CHANGES IN TYPE OF ENGAGEMENT AFTER COMMENCEMENT
      • Step-ups
      • Step-down from Audit to Review or Compilation
      • Step-down from Review to Compilation
      • Step-down from Full Disclosure to Omission of Substantially All Disclosures
      • Change from a Compilation of Third-party-use Financial Statements to a Compilation of Management-use-only Financial Statements
    • 205 SUBSEQUENT EVENTS
      • Types of Subsequent Events
      • Reissued Financial Statements
    • 206 SUBSEQUENT DISCOVERY OF FACTS EXISTING AT DATE OF REPORT
      • Legal Implications
      • Summary of Guidance
      • Notification of Users
    • 207 WORKPAPER DOCUMENTATION
      • Required Workpapers for a Review Engagement
      • Required and Suggested Workpapers for a Compilation Engagement
      • Documentation Requirements for Nonattest Services
      • Use of Checklists and Forms
        • Use of the Term Partner.
      • Maintaining Engagement Documentation
        • Assembly of Engagement Documentation.
        • Compilation and Review Documentation Assembly Requirements.
        • Retention of Engagement Documentation.
        • Compilation and Review Documentation Retention Requirements.
        • Retention Location.
        • Confidentiality, Custody, Integrity, Accessibility, and Retrievability of Engagement Documentation.
        • Confidentiality.
        • Custody, Integrity, Accessibility, and Retrievability.
        • Electronic Engagement Documentation.
    • 208 WHEN TO WITHDRAW FROM AN ENGAGEMENT
    • 209 COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR ACCOUNTANTS (SSARS NO. 4--AR 400)
      • Communications When Successor Believes Prior-period Financial Statements Require Revision
      • Inquiries in Connection with Acceptance of an Engagement
      • Other Inquiries
      • Summary Points
      • Communications with Continuing Accountants
    • 210 PRACTICE ISSUES IN COMPILATION AND REVIEW ENGAGEMENTS
      • Litigation Risks
        • Quality Control.
        • Professional Liability Insurance.
        • Loss Prevention.
        • Engagement Letters.
      • Responsibility for Fraud and Illegal Acts
        • Use of Engagement Letters to Clarify the Accountant's Responsibilities.
        • Client Representation Letters in Review Engagements.
        • Communication of Suspected Fraud or Illegal Acts.
      • Other Practice Issues
        • Bookkeeping Services.
        • Licensing Problems.
        • Liability to Third Parties.
        • Third-party Privity Letters.
    • 211 QUALITY CONTROL AND PEER REVIEW STANDARDS
      • Quality Control Standards
        • Professional Requirements.
        • Elements of a Quality Control System.
        • Relationship of SSARS to Quality Control Standards.
        • Documentation and Communication of the Firm's QC Policies and Procedures.
        • Establishing Criteria for Engagement Quality Control Reviews (EQCR).
      • Peer Review Standards
        • Applicability of Peer Review Requirements.
        • Are SSARS Compilations of Management-use-only Financial Statements Subject to Peer Review?
        • Types of Reviews.
        • Engagement Reviews.
        • Selection of Engagements for Review.
      • Compilation and Review Checklists Should Comply with Peer Review and SSARS Standards
        • Quality Control Materials.
        • PPC's QCM Have Been Peer Reviewed.
        • Engagement Planning Considerations.
      • Deficiencies Noted in Recent Peer Review Reports
      • Code of Professional Conduct
    • 212 OTHER ADMINISTRATIVE FORMS
      • Introduction
        • Trial Balance Preparation Checklist.
        • Routing Instructions for Processing Financial Statements.
        • Consultation, Differences of Opinion, and Engagement Withdrawal Documentation Form.
        • Report Transmittal Letter--Drafting Form.
    • 213 ACCOUNTING SOFTWARE
      • Introduction
        • What Accounting Software Does.
        • Types of Accounting Software.
        • General Ledger Packages.
        • Write-up Packages.
        • Choosing a Software Package.
    • 214 INDEPENDENCE ISSUES RELATING TO COMPILATION AND REVIEW ENGAGEMENTS
      • Authoritative Literature Relating to Independence
        • Conceptual Framework for Independence.
      • Impairment of Independence by Unpaid Fees
      • Does Providing Accounting/Write-up Services Impair a CPA's Independence?
        • Nonattest Services.
        • Additional Questions in Applying Interpretation 101-3 (ET 101.05).
        • Illustrative Examples.
    • 215 CONSULTATION AND DIFFERENCES OF OPINION IN COMPILATION AND REVIEW ENGAGEMENTS
      • Do the Standards Require Accountants Performing Compilation and Review Engagements to Resolve Complex Technical Issues through Consultation?
      • When to Document Consultation
      • In-firm Consultation versus Outside-firm Consultation
        • In-firm Consultation.
        • Outside Firm Consultation.
      • Differences of Opinion
      • Withdrawing from an Engagement or Ending a Client Relationship
        • Documenting a Withdrawal.
        • Communicating the Decision to Withdraw or Discontinue Services.
        • Accounting and Engagement Issues Form.
    • 216 ACCOUNTANT'S RESPONSIBILITIES FOR GOING CONCERN IN COMPILATION AND REVIEW ENGAGEMENTS
    • APPENDIX 2A: Engagement Letter for Monthly, Quarterly, or Annual Engagements
    • APPENDIX 2B: Illustrative Engagement Letter--Compilatio
    • APPENDIX 2C: Illustrative Engagement Letter--Review
    • APPENDIX 2D: Illustrative Expanded Engagement Letter--Compilation
    • PPENDIX 2E: Illustrative Expanded Engagement Letter--Review
    • APPENDIX 2F: Checklist for a Step-down Engagement (Audit to Review or Compilation/Review to Compilation)
    • APPENDIX 2G: Resignation Letter--Drafting Form
    • APPENDIX 2H: Trial Balance Preparation Checklist
    • APPENDIX 2I: Routing Instructions for Processing Financial Statements
    • APPENDIX 2J: Accounting and Engagement Issues
    • APPENDIX 2K: Accounting and Auditing Reference Literature
    • APPENDIX 2L: Illustrative Engagement Letter--Management-use-only Financial Statements
    • APPENDIX 2M: Illustrative Expanded Engagement Letter--Management-use-only Financial Statements
    • APPENDIX 2N: Illustrative Engagement Letter--Interim Management-use-only Financial Statements and Year-end Third-party-use Compilation
    • APPENDIX 2O: Report Transmittal Letter--Drafting Form
    • APPENDIX 2P: Letter Granting Successor Accountants Access to Workpapers
    • APPENDIX 2Q: Journal Entry Approval Form
    • APPENDIX 2R: ET Interpretation 101-3 (ET 101.05) Documentation Form
    • APPENDIX 2S: Illustrative Engagement Letter--Compilation of a Specified Element, Account, or Item of a Financial Statement
    • APPENDIX 2T: Illustrative Engagement Letter--Compilation of Pro Forma Financial Information
    • APPENDIX 2U: Illustrative Engagement Letter--Compilation and Tax Return Preparation
    • APPENDIX 2V: Illustrative Engagement Letter--Review and Tax Return Preparation
  • CHAPTER 3: COMPILATION PROCEDURES AND CHECKLISTS
    • 300 INTRODUCTION
      • What SSARS No. 19 Requires
      • What SSARS No. 19 Does Not Require
    • 301 COMPILATIONS OF MANAGEMENT-USE-ONLY FINANCIAL STATEMENTS
      • Introduction
      • Pros and Cons of Issuing Management-use-only Financial Statements
        • Pros.
        • Cons.
    • 302 CONSIDERING THE INTENDED USE OF THE FINANCIAL STATEMENTS
      • Introduction
      • Third-party-use versus Management-use-only Financial Statements
        • Who Is Management?
      • Intended Use of the Financial Statements
      • Accountants' Responsibilities When Management-use-only Financial Statements Are Distributed to Third Parties
    • 303 COMPILATION PROCEDURES
      • Introduction
      • Understanding with the Entity
      • Understanding of the Industry
      • Knowledge of the Client
        • Compilation of Management-use-only Financial Statements.
      • Reading the Compiled Financial Statements
        • Compilation of Management-use-only Financial Statements.
      • Incorrect, Incomplete, or Unsatisfactory Information
      • Documentation in a Compilation Engagement
      • Legend for Management-use-only Financial Statements
      • Obtaining Written Representations from Management in a Compilation Engagement
    • 304 COMPILATION ENGAGEMENT CHECKLISTS
      • Compilation Checklists Should Include Procedures Necessary to Comply with the QC Standards
      • Select a System of Compilation Checklists That Complements Your Firm Size
      • Compilation Procedures, Review, and Approval Forms (Appendix 3B)
      • Engagement Acceptance Form (Appendix 3C)
      • Engagement Letters (Appendixes 2A, 2B, 2D, 2L, 2M, 2N, and 2U)
      • Client Information Form (Appendix 3D)
      • Compilation Reporting Checklist (Appendix 3E)
      • Financial Statement Disclosure Checklists (Appendixes 5C-1 and 5C-2)
    • 305 OTHER REQUIREMENTS OF THE PROFESSION
      • Rule 201
      • Quality Control Standards
    • APPENDIX 3A: Cross-reference of Authors' Recommended Forms and Checklists with Peer Review Requirements
    • APPENDIX 3B: Compilation Procedures, Review, and Approval Forms
      • APPENDIX 3B-1: Compilation Procedures, Review, and Approval Form (Comprehensive)
      • APPENDIX 3B-2: Compilation Procedures, Review, and Approval Form (Summarized)
      • APPENDIX 3B-3: Compilation Procedures, Review, and Approval Form for Management-use-only Financial Statements
    • APPENDIX 3C: Engagement Acceptance Form
    • APPENDIX 3D: Client Information Form
    • APPENDIX 3E: Compilation Reporting Checklist
  • CHAPTER 4: REVIEW PROCEDURES AND CHECKLISTS
    • 400 INTRODUCTION
    • 401 UNDERSTANDING OF THE INDUSTRY AND KNOWLEDGE OF THE CLIENT
      • What Level of Knowledge Is Necessary?
      • How to Acquire It
    • 402 DESIGNING AND PERFORMING REVIEW PROCEDURES
    • 403 INQUIRIES
      • What Is Required?
    • 404 ANALYTICAL PROCEDURES
      • Purpose of Analytical Procedures
      • What Are Analytical Procedures?
      • Selecting Appropriate Analytical Procedures
      • Examples of Analytical Procedures
        • Trend Analysis.
        • Reasonableness Tests.
        • Ratio Analysis.
        • Developing an Analytical Ratio History.
      • Developing Expectations
        • Documenting Expectations.
      • When the Results of Analytical Procedures Are Unfavorable
      • Limitations of Analytical Procedures
    • 405 UNSATISFACTORY INFORMATION
    • 406 ILLUSTRATIVE REVIEW PROCEDURES
    • 407 DOCUMENTING MATERIALITY
    • 408 ACCUMULATING PASSED ADJUSTMENTS
    • 409 READING THE REVIEWED FINANCIAL STATEMENTS
    • 410 OBTAINING REPORTS FROM OTHER ACCOUNTANTS
    • 411 COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS
    • 412 REPRESENTATION LETTERS
      • Reasons for Obtaining a Representation Letter
      • Modifications to the Standard Letter
        • Alternative Wording.
        • Additional Representations.
      • Refusal to Furnish a Representation Letter
      • Periods Covered by the Representation Letter
      • Date of the Representation Letter
      • Illustrative Representation Letter
      • Updating Representation Letters
    • 413 LEGAL REPRESENTATION LETTERS IN A REVIEW ENGAGEMENT
    • 414 INITIAL REVIEW ENGAGEMENTS
      • Analytical Procedures on Initial Engagements
    • 415 REVIEW ENGAGEMENT CHECKLISTS
      • Select a System of Review Checklists That Complements Your Firm Size
      • Review Procedures, Review, and Approval Form (Appendix 4B)
      • Inquiry and Analytical Procedures Program (Appendix 4C)
      • Review Reporting Checklist (Appendix 4D)
    • APPENDIX 4A: Illustrative Representation Letter Review Engagement
    • APPENDIX 4B: Review Procedures, Review, and Approval Form
    • APPENDIX 4C: Inquiry and Analytical Procedures Program
    • APPENDIX 4D: Review Reporting Checklist
    • APPENDIX 4E: Common Ratios Used in Analytical Procedures
    • APPENDIX 4F: Illustrative Updating Representation Letter
    • 9 APPENDIX 4G: Analytical Procedures Documentation Form
  • CHAPTER 5: FORM AND PRESENTATION OF FINANCIAL STATEMENTS
    • 500 INTRODUCTION
    • 501 TITLE PAGE
      • General
      • Name of Entity
      • Title of Financial Statements
      • Date or Period Covered
      • Different Levels of Service--Comparative Financial Statements
    • 502 TABLE OF CONTENTS
    • 503 PRESENTATION OF THE ACCOUNTANT'S REPORT
      • General
      • Letterhead
      • Title of Accountant's Report
      • Address
      • Salutations
      • Signature
      • Date of Report
      • Periods Covered
      • Use of "I" versus "We" in Accountant's Report
    • 504 BASIC FINANCIAL STATEMENTS
      • What Are They?
      • Comparative Financial Statements
      • Heading Financial Statements
      • Reference to Accountant's Report
      • Legend for Management-use-only Financial Statements
        • Placing the Legend.
      • Use of "Unaudited"
      • Different Levels of Service
      • Referencing Notes
    • 505 BALANCE SHEET
      • Balance Sheet Title
      • Balance Sheet Format
    • 506 INCOME STATEMENT
      • Title of Statement of Income
      • Income Statement Format
    • 507 COMPREHENSIVE INCOME
      • Amendment to FASB ASC 220
      • Definition of Comprehensive Income
      • Presentation of Comprehensive Income
        • Requirements before ASU 2011-05.
        • Requirements after ASU 2011-05.
        • Classifying Other Comprehensive Income.
        • Reclassification Adjustments.
        • Reporting Tax Effects Related to Other Comprehensive Income.
        • Financial Statement Presentation.
        • Other Presentation Alternatives.
      • Reporting Accumulated Comprehensive Income in the Balance Sheet
    • 508 STATEMENTS OF RETAINED EARNINGS OR CHANGES IN STOCKHOLDERS' EQUITY
      • General
      • Combined Statement of Income and Retained Earnings
      • Restatement of Retained Earnings
      • Separate Statement of Retained Earnings
      • Statement of Changes in Stockholders' Equity--Comparative Statements Presented
      • Statement of Changes in Stockholders' Equity--Single Year Statement
      • Negative Equity
    • 509 STATEMENT OF CASH FLOWS
      • How Cash Is Defined
      • Basic Elements
        • Types of Cash Flows.
      • Gross and Net Cash Flows
      • Format Considerations
        • Title.
        • Order of Presentation.
        • Captions.
      • Cash Flows from Operating Activities
        • What Is Included?
        • What Is Excluded?
        • Basic Format.
        • Direct Method.
        • Indirect Method.
        • Which Method Is Better?
        • Changes in Operating Current Assets and Liabilities.
      • Cash Flows from Investing Activities
        • Format Considerations.
      • Cash Flows from Financing Activities
        • Format Considerations.
      • Noncash Investing and Financing Activities
        • Format Considerations.
    • 510 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      • When Is It Required?
      • What Must Be Included?
        • General Requirements.
        • Specifically Required Accounting Policy Disclosures.
      • Recommended Accounting Policy Disclosures
      • Manner of Disclosure
      • Other Disclosures
      • Sample Disclosures
    • 511 NOTES TO FINANCIAL STATEMENTS
      • General
      • Format
      • Title
      • Referencing Notes in the Financial Statements
      • Content (Disclosure Checklists)
      • Illustrative Notes
    • 512 SUPPLEMENTARY OR OTHER INFORMATION
      • General
      • Content
      • Presentation
      • Reporting
      • Percentages
      • Charts and Graphs
      • Details of Consolidation or Combination
      • Schedule Headings
      • Reference to Report
    • 513 DEVELOPMENT STAGE COMPANIES
    • 514 RISKS AND UNCERTAINTIES
      • Nature of Operations
      • Use of Estimates
      • Certain Significant Estimates
        • Reasonably Possible.
        • Near Term.
        • Material.
        • Estimates to Which the Disclosure Requirement Applies.
        • Disclosure Requirements.
      • Current Vulnerability Due to Concentrations
        • What Is a Concentration?
        • Criteria for Disclosure.
        • Severe Impact.
        • Disclosures.
        • Summary of Disclosure Requirements.
        • Wording the Disclosures.
    • 515 DERIVATIVE INSTRUMENTS
      • What Is a Derivative?
      • Accounting for Derivatives
      • Disclosure Requirements
      • Common Uses of Derivatives
      • Interest Rate Swap
      • Options to Establish a Range of Interest Rates
      • Forward Contract to Buy Foreign Currency
      • Option to Buy Foreign Currency
    • 516 ACCOUNTS RECEIVABLE
      • Presentation and Disclosure Considerations for Receivables
        • Accounting Policies for Trade Receivables and Credit Losses and Doubtful Accounts.
        • Amount of the Valuation Allowance and Material Changes in the Allowance.
    • 517 COMPANIES THAT CHANGE FISCAL YEAR
    • 518 ADVERTISING COSTS
      • When Should Advertising Costs Be Expensed?
      • When Should Advertising Costs Be Capitalized?
      • Direct-response Advertising Costs to Capitalize and Amortize
      • Practical Consideration
      • Required Disclosures
    • 519 CONSIDERING THE NEED TO CONSOLIDATE A VARIABLE INTEREST ENTITY
      • When to Consider Whether the Reporting Entity Has a Variable Interest in a Variable Interest Entity
      • Some Notions Underlying the Remaining Considerations
        • The Notions of Losses, Benefits, and Sufficiency of Equity.
        • Assessing the Sufficiency of Equity.
        • The Power to Direct Significant Activities.
      • Determining Whether the Other Entity is a Variable Interest Entity
      • Determining Whether the Reporting Entity Has a Variable Interest in a Variable Interest Entity
      • Determining Whether Consolidation is Required
        • Is There a Principal-agency Relationship between Members of the Related-party Group?
        • Are the Activities of the Lessor More Important to One Member of the Related-party Group Than to Another?
        • Does One Party Have More Exposure to the Variability Associated with the Anticipated Economic Performance of the Variable Interest Entity?
        • What Is the Design of the Lessor?
        • Evaluating the Results.
        • Disclosures.
    • 520 UNCERTAINTIES REGARDING TAX POSITIONS
      • Accounting for Uncertainty in Income Taxes
    • 521 CONSOLIDATED, CONSOLIDATING, AND COMBINED FINANCIAL STATEMENTS
      • Consolidated and Consolidating Financial Statements
      • Reporting Implications of Consolidating Financial Statements
      • Combined Financial Statements
      • Combined Financial Statement Style and Format Considerations
        • Equity Section.
    • 522 FAIR VALUE MEASUREMENTS
      • The Definition of Fair Value
      • The Assets or Liabilities
      • The Price
      • The Market
      • Market Participants
      • Asset Valuation Considerations
      • Liability Valuation Considerations
      • Initial Recognition
      • Valuation Techniques
      • Valuation Inputs and the Fair Value Hierarchy
        • Level 1 Inputs.
        • Level 2 Inputs.
        • Level 3 Inputs.
        • Bid and Ask Prices.
        • Investments in Entities That Calculate Net Asset Value Per Share.
      • Inactive Markets
    • 523 MATERIALITY
    • APPENDIX 5A: Illustrative Financial Statements--Comparative Accrual Basis Corporation with Supplementary Information
    • APPENDIX 5B: Selected Notes
    • APPENDIX 5C: Disclosure Checklists
      • APPENDIX 5C-1: Summarized Disclosure Checklist
      • APPENDIX 5C-2: Disclosure Requirements for Financial Statements of Nonpublic Companies (Long-form Disclosure Checklist)
    • APPENDIX 5D: Determining the Impact of Accounting Requirements on Variable Interest Entities on a Reporting Entity
  • CHAPTER 6: REPORTING ON COMPILED OR REVIEWED FINANCIAL STATEMENTS
    • 600 THE ACCOUNTANT'S REPORTING OBLIGATION
      • Financial Statements Prepared in Accordance with International Standards
    • 601 COMPILATION REPORTS
      • Required Elements
    • 602 REVIEW REPORTS
      • Required Elements
    • 603 HIGHEST LEVEL OF SERVICE
      • Different Levels of Service on the Same Financial Statements
      • Different Levels of Service on Financial Statements of the Same Period
    • 604 DATE OF REPORTS
      • Dating Compilation Reports
      • Dating Review Reports
      • Reporting on Comparative Financial Statements
    • 605 REFERENCE TO ACCOUNTANT'S REPORT ON THE FINANCIAL STATEMENTS
    • 606 REPORTING WHEN NOT INDEPENDENT
    • 607 REPORTING ON FINANCIAL STATEMENTS THAT OMIT SUBSTANTIALLY ALL DISCLOSURES
    • 608 REPORTING WHEN THE STATEMENT OF CASH FLOWS OR COMPREHENSIVE INCOME IS OMITTED
      • Omission of Statement of Cash Flows
        • Omission of Statement of Cash Flows and Substantially All Disclosures Omitted.
      • Omission of Comprehensive Income
        • Omission of Display of Comprehensive Income and Substantially All Disclosures Omitted.
    • 609 REPORTING ON FINANCIAL STATEMENTS WITH DEPARTURES FROM GAAP (EXCLUDING PRESCRIBED FORMS AND SPECIAL-PURPOSE PRESENTATIONS NOT IN CONFORMITY WITH GAAP)
      • What Is GAAP?
      • What Is a Material GAAP Departure?
      • Alternatives When Faced with a GAAP Departure
    • 610 REPORTING WHEN THERE ARE SIGNIFICANT DEPARTURES FROM GAAP (EXCLUDING PRESCRIBED FORMS AND SPECIAL-PURPOSE PRESENTATIONS NOT IN CONFORMITY WITH GAAP)
    • 611 REPORTING ON COMPUTER-PREPARED FINANCIAL STATEMENTS
    • 612 REPORTING WHEN THERE IS A SCOPE LIMITATION
    • 613 REPORTING ON FINANCIAL STATEMENTS INCLUDED IN MCS REPORTS
      • Financial Statements Compiled or Reviewed by Another Accountant
      • Client-prepared Financial Statements
    • 614 REPORTING WHEN ONLY ONE FINANCIAL STATEMENT IS PRESENTED
    • 615 REPORTING WHEN SUPPLEMENTARY INFORMATION IS PRESENTED
      • What Is the Definition of Supplementary Information?
      • Supplementary Information Accompanying Compiled Financial Statements
      • Supplementary Information Accompanying Reviewed Financial Statements
      • Client-prepared Supplementary Information
        • Client-prepared Supplementary Information Bound in the Accountant's Report Cover.
        • Supplementary Information Attached by the Client.
      • Are Percentages Presented on Financial Statements Supplementary Information?
      • Is a Forecast or Projection Presented with Historical Financial Statements Supplementary Information?
      • Supplementary Information Presented without Financial Statements
      • Presentation Guidelines for Supplementary Information
    • 616 REQUIRED SUPPLEMENTARY INFORMATION
      • Common Interest Realty Associations
        • Required Supplementary Information.
        • Reviewing Required Supplementary Information.
    • 617 REPORTING ON CHARTS AND GRAPHS
      • Charts and Graphs That Accompany Financial Statements
      • Stand-alone Charts and Graphs
    • 618 REPORTING ON COMPARATIVE FINANCIAL STATEMENTS
      • Standard Reports
      • Titling Accountant's Reports on Comparative Financial Statements
      • Change in Level of Service--Current Period Reviewed/Prior Period Compiled
      • Change in Level of Service--Current Period Compiled/Prior Period Reviewed
      • Change in Level of Service--Current Period Compiled or Reviewed/Prior Period Audited
      • Change in Level of Service--Disclosures Omitted
      • Change of Accountants--General
      • Change of Accountants--Predecessor Accountant Reissues His Report
      • Change of Accountants--Reference Made to Predecessor Accountant's Report
      • The Reference to the Predecessor Accountant's Report Should Not Include the Name of the Predecessor Accountant
      • Change of Accountants--Successor Accountant Compiles, Reviews, or Audits Prior-period Financial Statements
      • Change of Accountants--Reporting Following a Merger or Purchase of an Accounting Firm
      • Change of Accountants--Predecessor Accountant Has Ceased Operations
      • Change of Accountants--What Is the Best Option?
      • Change of Status--Issuer to Nonissuer
      • Change of Status--Nonissuer to Issuer
      • Change in Prior-period Financial Statements--General
      • Change in Prior-period Financial Statements--Continuing Accountant
      • Restated Prior-period Financial Statements--Successor Accountant
      • Dual Dating
      • Client-prepared Financial Statements
        • Client-prepared Financial Statements Bound in the Accountant's Report Cover.
        • Client-prepared Financial Statements Attached by the Client.
        • The Client's Disclaimer.
      • Reporting Independence Impairment When the Independence is Impaired in Only One Period
      • Flowchart of SSARS No. 2
    • 619 REPORTING ON ACCOUNTING CHANGES
      • Change in Accounting Estimate
      • Change in Reporting Entity
      • Change in Accounting Principle
        • Accounting for a Change in Accounting Principle.
        • Accounting Change Prescribed by New Pronouncements.
        • Justification for a Change in Accounting Principle.
        • Reporting on a Change in Accounting Principle.
    • 620 COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR ACCOUNTANTS
    • 621 REPORTING ON NONPROFIT ORGANIZATIONS
    • 622 REPORTING ON GOVERNMENTAL ENTITIES
    • 623 OTHER REPORTING SITUATIONS
      • Specified Elements, Accounts, or Items of a Financial Statement
      • Compliance with Aspects of Contractual Agreements or Regulatory Requirements
      • Special-purpose Financial Statements That Are Prepared on a Basis of Presentation Specified in a Contractual Agreement or by Regulatory Provision
        • Incomplete Presentation That Is Otherwise in Conformity with GAAP or OCBOA.
        • Complete Presentation That Is Not in Conformity with GAAP or OCBOA.
      • Split-level Reporting
      • Use of Emphasis Paragraphs in Compilation and Review Reports
        • Emphasis Paragraphs in Compiled Financial Statements that Omit Substantially all Disclosures.
      • Reporting on Uncertainties
      • Going-concern Uncertainties
      • Lawsuit Uncertainties
      • Reporting When There Is a Correction of an Error
        • Issuing a Revised Compilation or Review Report.
        • Issuing a Revised Report on Compiled Financial Statements That Omit Substantially All Disclosures.
        • Dating the Revised Report.
        • Issuing a New Compilation or Review Report.
      • Reporting When Other Accountants Have Audited or Reviewed a Component
      • Tax Returns
      • General Ledger Bound with Financial Statements
      • Preliminary Financial Statement Drafts
      • Summary Financial Statements
      • Reporting in Initial Accounting Periods
      • Reporting on Development Stage Companies
      • Reporting on Companies in Liquidation
      • Reporting by Companies in Reorganization under the Bankruptcy Code
      • Financial Statements Submitted to a Court of Law (Performing Litigation Services)
      • Break-even Financial Statements
      • Financial Statements for a Period Longer Than 12 Months
      • Reports on the Application of Requirements of an Applicable Financial Reporting Framework
      • Reviewing Financial Statements of an Issuer
        • Federal Securities Laws.
        • State Securities Laws.
        • Increased Risk.
      • Interim Information in Notes to Audited Financial Statements
      • Reporting on Consolidated or Combined Financial Statements
      • Reporting on Subsidiaries, Branches, Divisions, or Affiliates
      • Supplementary Information Presented for Periods Prior to Those of the Financial Statements
      • Restricting the Use of a Report
      • Reporting on Pro Forma Financial Information
      • Variable Interest Entities Reporting Considerations
        • Scope Limitations.
        • GAAP Departures.
        • Effect on Engagement When an Assessment Is Not Made.
        • Alternative Reporting Considerations.
    • APPENDIX 6A: Compilation Reports for Accrual Basis Corporations
      • APPENDIX 6A-1: Compilation--Corporation on the Accrual Basis, Standard Report
      • APPENDIX 6A-2: Compilation--Corporation on the Accrual Basis, Lack of Independence
      • APPENDIX 6A-3: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted
      • APPENDIX 6A-4: Compilation--Corporation on the Accrual Basis, Statement of Cash Flows Omitted
      • APPENDIX 6A-5: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Property Carried at Appraised Value) and Impact of Departure Is Determined
      • APPENDIX 6A-6: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Manufacturing Overhead Excluded from Inventory and Leases Not Capitalized) and Impact of Departure Not Determined
      • APPENDIX 6A-7: Compilation--Corporation on the Accrual Basis, Balance Sheet Only
      • APPENDIX 6A-8: Compilation--Corporation on the Accrual Basis, Balance Sheet Only, Substantially All Disclosures Omitted
      • APPENDIX 6A-9: Compilation--Corporation on the Accrual Basis, Income Statement Only
      • APPENDIX 6A-10: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted and Statement of Cash Flows Omitted
      • APPENDIX 6A-11: Compilation--Corporation on the Accrual Basis, Compiled Supplementary Information Presented
      • APPENDIX 6A-12: Compilation--Corporation on the Accrual Basis, Disclosure Departure (Failure to Disclose Information about Financial Instruments with Concentrations of Credit Risk) from GAAP and Impact of Departure Is Determined
      • APPENDIX 6A-13: Compilation--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Future Commitments under Long-term Operating Leases) and Impact of Departure Not Determined
      • APPENDIX 6A-14: Compilation--Corporation on the Accrual Basis, Income Statement Accompanied by Expired Budget Information
      • APPENDIX 6A-15: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Depreciation Computed Using Modified Accelerated Cost Recovery System Guidelines) and Impact of Departure Not Determined
      • APPENDIX 6A-16: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Deferred Taxes) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 6A-17: Compilation--Corporation on the Accrual Basis, Compiled Supplementary Information Presented, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 6A-18: Compilation--Standard Report on Consolidated Financial Statements of a Corporation
      • APPENDIX 6A-19: Compilation--Standard Report on Combined Financial Statements
      • APPENDIX 6A-20: Compilation--Wholly-owned Subsidiary Corporation on the Accrual Basis, Standard Report
      • APPENDIX 6A-21: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Provision for Uncollectible Accounts Receivable) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 6A-22: Compilation--Corporation on the Accrual Basis, Measurement Departure from GAAP (Omission of Income Tax Accrual) and Impact of Departure Not Determined, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 6A-23: Compilation--Branch of a Corporation on the Accrual Basis, Standard Report
      • APPENDIX 6A-24: Compilation--Corporation on the Accrual Basis, Comprehensive Income Omitted
      • APPENDIX 6A-25: Compilation--Corporation on the Accrual Basis, Substantially All Disclosures Omitted and Display of Comprehensive Income Omitted
      • APPENDIX 6A-26: Compilation of a Specified Element, Account, or Item of a Financial Statement
      • APPENDIX 6A-27: Compilation of Pro Forma Financial Information
      • APPENDIX 6A-28: Compilation--Corporation on the Accrual Basis, Departure from GAAP (Unconsolidated Variable Interest Entity) and Impact of Departure Not Determined
      • APPENDIX 6A-29: Compilation--Corporation on the Accrual Basis, Supplementary Information Not Compiled
    • APPENDIX 6B: Review Reports for Accrual Basis Corporations
      • APPENDIX 6B-1: Review--Corporation on the Accrual Basis, Standard Report
      • APPENDIX 6B-2: Review--Corporation on the Accrual Basis, Statement of Cash Flows Omitted
      • APPENDIX 6B-3: Review--Corporation on the Accrual Basis, Measurement Departure from GAAP (Property Carried at Appraised Value) and Impact of Departure Is Determined
      • APPENDIX 6B-4: Review--Corporation on the Accrual Basis, Measurement Departure from GAAP (Manufacturing Overhead Excluded from Inventory and Leases Not Capitalized) and Impact of Departure Not Determined
      • APPENDIX 6B-5: Review--Corporation on the Accrual Basis, Balance Sheet Only
      • APPENDIX 6B-6: Review--Corporation on the Accrual Basis, Supplementary Information Covered by Review Procedures
      • APPENDIX 6B-7: Review--Corporation on the Accrual Basis, Supplementary Information Not Covered by Review Procedures
      • APPENDIX 6B-8: Review--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Related Party Transactions) and Impact of Departure Is Determined
      • APPENDIX 6B-9: Review--Corporation on the Accrual Basis, Disclosure Departure from GAAP (Failure to Disclose Future Commitments under Long-term Operating Leases) and Impact of Departure Not Determined
      • APPENDIX 6B-10: Review--Corporation on the Accrual Basis, Income Statement Accompanied by Expired Budget Information Not Covered by Review Procedures
      • APPENDIX 6B-11: Review--Standard Report on Consolidated Financial Statements of a Corporation
      • APPENDIX 6B-12: Review--Standard Report on Combined Financial Statements of a Corporation
      • APPENDIX 6B-13: Review--Corporation on the Accrual Basis, Comprehensive Income Omitted
      • APPENDIX 6B-14: Review--Corporation on the Accrual Basis, Departure from GAAP (Unconsolidated Variable Interest Entity) and Impact of Departure Not Determined
      • APPENDIX 6B-15: Review--Corporation on the Accrual Basis, Standard Report, Dual-dated
    • APPENDIX 6C: Comparative Compilation and Review Reports
      • APPENDIX 6C-1: Comparative Statements--Each Period Compiled by Continuing Accountant
      • APPENDIX 6C-2: Comparative Statements--Each Period Reviewed by Continuing Accountant
      • APPENDIX 6C-3: Comparative Statements--Current Period Reviewed and Prior Period Compiled by Continuing Accountant
      • APPENDIX 6C-4: Comparative Statements--Current Period Compiled and Prior Period Reviewed by Continuing Accountant, Alternative 1 (Referring to Prior Period Review Report)
      • APPENDIX 6C-5: Comparative Statements--Current Period Compiled and Prior Period Reviewed by Continuing Accountant, Alternative 2 (Reissuing Prior Year Report)
      • APPENDIX 6C-6: Comparative Statements--Both Years Compiled; However, Prior Year by a Different Accountant (Predecessor's Report Not Presented)
      • APPENDIX 6C-7: Comparative Statements--Both Years Reviewed; However, Prior Year by a Different Accountant (Predecessor's Report Not Presented)
      • APPENDIX 6C-8: Comparative Statements--Current Year Reviewed and Prior Year Compiled by a Different Accountant (Predecessor's Report Not Presented)
      • APPENDIX 6C-9: Comparative Statements--Current Year Compiled and Prior Year Reviewed by a Different Accountant (Predecessor's Report Not Presented)
      • APPENDIX 6C-10: Comparative Statements--Both Years Compiled by the Same Accountant; However, Changed Reference to a Departure from GAAP in Prior Year Report
      • APPENDIX 6C-11: Comparative Statements--Both Years Reviewed by the Same Accountant; However, Changed Reference to a Departure from GAAP in Prior Year Report
      • APPENDIX 6C-12: Comparative Statements--Current Period Compiled, Prior Period Audited
      • APPENDIX 6C-13: Comparative Statements--Current Period Reviewed, Prior Period Audited
      • APPENDIX 6C-14: Comparative Statements--Compilation Report on Prior Year's Financial Statements That Previously Did Not Omit Substantially All Disclosures
      • APPENDIX 6C-15: Comparative Statements--Both Years Compiled; However, Prior Year by a Different Accountant Who Has Ceased Operations
      • APPENDIX 6C-16: Comparative Statements--Both Years Reviewed; However, Prior Year by a Different Accountant Who Has Ceased Operations
      • APPENDIX 6C-17: Comparative Statements--Current Year Compiled and Prior Year Audited by a Different Accountant Who Has Ceased Operations
      • APPENDIX 6C-18: Comparative Statements--Current Year Reviewed and Prior Year Audited by a Different Accountant Who Has Ceased Operations
      • APPENDIX 6C-19: Comparative Statements--Current Period Compiled, Prior Period Audited, Supplementary Information Presented Both Years
      • APPENDIX 6C-20: Comparative Statements--Current Period Reviewed, Prior Period Audited, Supplementary Information Presented Both Years
      • APPENDIX 6C-21: Comparative Statements--Corporation on the Accrual Basis, Balance Sheet Only, Each Period Compiled by Continuing Accountant
      • APPENDIX 6C-22: Comparative Statements--Compiled Current Year Balance Sheet and Comparative Statements of Income and Retained Earnings and Cash Flows
      • APPENDIX 6C-23: Comparative Statements--Reviewed Current Year Balance Sheet and Comparative Statements of Income and Retained Earnings and Cash Flows
      • APPENDIX 6C-24: Comparative Statements--Both Years Compiled; However, Prior Year Financial Statements Have Been Restated
      • APPENDIX 6C-25: Comparative Statements--Both Years Reviewed; However, Prior Year Financial Statements Have Been Restated
    • APPENDIX 6D: Unusual Variations of Compilation and Review Reports
      • APPENDIX 6D-1: Review--Major Uncertainty, Ability to Continue as a Going Concern in Question
      • APPENDIX 6D-2: Review--Reporting When Part of the Consolidated Statements Are Reviewed or Audited by Another Accountant
      • APPENDIX 6D-3: Departure from GAAP--Change in Accounting Principle without Reasonable Justification
      • APPENDIX 6D-4: Compilation--Reporting on the First Year of Operations (Which May Be for 12 Months or a Shorter Period)
      • APPENDIX 6D-5: Compilation--Current Year Presented on the Liquidation Basis; Prior Year Presented on the Going Concern Basis
      • APPENDIX 6D-6: Compilation--Development Stage Company
      • APPENDIX 6D-7: Compilation--Special-purpose Financial Presentation That Is Not in Conformity with GAAP or OCBOA
      • APPENDIX 6D-8: Review--Special-purpose Financial Presentation That Is Not in Conformity with GAAP or OCBOA
      • APPENDIX 6D-9: Compilation--Comparative Statements with Prior Period Reporting on the First Year of Operations (Which May Be for 12 Months or a Shorter Period)
      • APPENDIX 6D-10: Review--Supplementary Information Presented for Periods Prior to Those of the Financial Statements
      • APPENDIX 6D-11: Compilation--Special-purpose Financial Presentation That Is an Incomplete Presentation but Is Otherwise in Conformity with GAAP or OCBOA
      • APPENDIX 6D-12: Review--Special-purpose Financial Presentation That Is an Incomplete Presentation but Is Otherwise in Conformity with GAAP or OCBOA
      • APPENDIX 6D-13: Compilation--Major Uncertainty, Legal Action
    • APPENDIX 6E: Compilation Reports for Nonprofit Organizations
      • APPENDIX 6E-1: Standard Nonprofit Organization Compilation Report
      • APPENDIX 6E-2: Nonprofit Organization Compilation Report--Substantially All Disclosures Omitted
      • APPENDIX 6E-3: Nonprofit Organization Compilation Report--Measurement Departure from GAAP (Improper Accounting for Donated Property) and Impact of Departure Not Determined
      • APPENDIX 6E-4: Nonprofit Organization Compilation Report--Cash Basis Financial Statements
    • APPENDIX 6F: Review Reports for Nonprofit Organizations
      • APPENDIX 6F-1: Standard Nonprofit Organization Review Report
      • APPENDIX 6F-2: Nonprofit Organization Review--Measurement Departure from GAAP (Improper Functional Allocation of Expenses) and Impact of Departure Is Determined
      • APPENDIX 6F-3: Nonprofit Organization Review Report--Cash Basis Financial Statements
    • APPENDIX 6G: Review Reports for Governmental Entities
      • APPENDIX 6G-1: Standard Review Report for a Governmental Entity
      • APPENDIX 6G-2: Governmental Entity Review Report--Departure from GAAP (Omission of Compensated Absences) and Impact of Departure Not Determined
  • CHAPTER 7: INTERIM ENGAGEMENTS
    • 700 PURPOSE OF THIS CHAPTER
    • 701 USING PPC'S FORMS AND CHECKLISTS IN INTERIM ENGAGEMENTS
      • Are Interim Engagements Subject to Peer Review?
      • Using PPC's Forms and Checklists in Interim Compilation Engagements
        • Engagement Acceptance Form (Appendix 3C).
        • Engagement Letters (Appendixes 2A, 2B, 2D, 2L, 2M, 2N, and 2U).
        • Checklist for a Step-down Engagement (Appendix 2F).
        • Compilation Procedures, Review, and Approval Forms (Appendix 3B).
        • Client Information Form (Appendix 3D).
        • Trial Balance Preparation Checklist (Appendix 2H).
        • Compilation Reporting Checklist (Appendix 3E).
        • Disclosure Checklists (Appendix 5C).
        • Routing Instructions (Appendix 2I).
      • Documenting Procedures in Interim Compilation Engagements
        • Completing a Compilation Procedures, Review, and Approval Form.
        • Completing an Interim Summarized Form.
        • Other Alternatives.
        • Special Considerations for the First Interim Period.
        • Special Considerations for Twelfth-month Interim Statements.
        • Partner Review on Recurring Interim Engagements.
      • Using PPC's Forms and Checklists in Interim Review Engagements
        • Engagement Acceptance Form (Appendix 3C).
        • Engagement Letters (Appendixes 2A, 2C, 2E, 2V, 8A-2, and 9A-2).
        • Checklist for a Step-down Engagement (Appendix 2F).
        • Inquiry and Analytical Procedures Program (Appendix 4C).
        • Review Procedures, Review, and Approval Forms (Appendix 4B).
        • Client Information Form (Appendix 3D).
        • Letter of Representation (Appendixes 4A, 8B, and 9E-2).
        • Review Reporting Checklist (Appendix 3E).
        • Disclosure Checklists (Appendix 5C).
        • Routing Instructions (Appendix 2I).
    • 702 GENERAL ACCOUNTING RULES FOR INTERIM FINANCIAL STATEMENTS
    • 703 REVENUE RECOGNITION
    • 704 INVENTORY AND COST OF GOODS SOLD
      • Gross Profit Method
      • Market Declines
      • LIFO Inventory Approximations
      • LIFO Inventory Liquidations
      • Standard Cost System
    • 705 OTHER COSTS AND EXPENSES
    • 706 INCOME TAXES
      • Overview of Accounting Requirements
      • Interim Income Taxes When Ordinary Income Is Estimated for the Year
      • Interim Income Taxes When Ordinary Income Is Estimated for the Year But There Is an Interim Loss
      • Interim Income Taxes When an Ordinary Loss Is Estimated for the Year
      • Prior-year Operating Loss Carryforwards
      • Accounting for Changes in Tax Rates or New Tax Legislation
      • Disclosure Considerations
      • Classifying Deferred Tax Balance Sheet Accounts
    • 707 EXTRAORDINARY ITEMS, UNUSUAL OR INFREQUENTLY OCCURRING ITEMS, AND DISPOSAL OF A COMPONENT OF AN ENTITY
      • Definitions
        • Extraordinary Items.
        • Unusual or Infrequently Occurring Items.
        • Component of an Entity.
      • Financial Statement Presentation
    • 708 WHEN TO CORRECT PRIOR PERIOD INTERIM FINANCIAL STATEMENTS
      • Prior Period Adjustments
      • Examples
      • Adjustments Related to Prior Interim Periods of the Current Fiscal Year
        • Prior Interim Period Adjustments That Are Not Errors.
        • Prior Interim Period Adjustments That Are Errors.
      • Materiality
    • 709 ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS
      • General
      • Change in Accounting Estimate
      • Change in Reporting Entity
      • Change in Accounting Principle
      • Disclosure of Change in Accounting Principle
      • Materiality
    • 710 DISCLOSURES IN INTERIM FINANCIAL STATEMENTS OF NONISSUERS
    • 711 REPORTING ISSUES
      • Introduction
      • Use of Different Bases of Accounting at Interim and Annual Periods
      • Disclosing the Basis of Accounting in OCBOA Financial Statements
      • Change in the Basis of Accounting
      • Special Considerations for Twelfth-month Interim Statements When a Higher Level of Service Will Be Performed
      • Using Standardized Reports
    • 712 ILLUSTRATIVE INTERIM FINANCIAL STATEMENTS
    • APPENDIX 7A: Compilation Procedures, Review, and Approval Forms for Recurring Interim Engagements
      • APPENDIX 7A-1: Compilation Procedures, Review, and Approval Form for Recurring Interim Engagements
      • APPENDIX 7A-2: Compilation Procedures, Review, and Approval Form for Recurring Interim Engagements to Provide Management-use-only Financial Statements
    • APPENDIX 7B: Accountant's Reports for Interim Financial Statements
      • APPENDIX 7B-1: Compilation--Year-to-date Interim Period
      • APPENDIX 7B-2: Compilation--Quarter and Year-to-date, Substantially All Disclosures Omitted
      • APPENDIX 7B-3: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows and Substantially All Disclosures, e.g., Computer-prepared Statements
      • APPENDIX 7B-4: Compilation--Year-to-date, Omission of Statement of Cash Flows, Federal Income Tax Provision, and Disclosures, e.g., Computer-prepared Statements
      • APPENDIX 7B-5: Compilation--Comparative Interim Periods
      • APPENDIX 7B-6: Compilation--Comparative Month and Year-to-date, Statements of Cash Flows and Disclosures Omitted
      • APPENDIX 7B-7: Compilation--Month and Year-to-date, Inventory Computed by the Gross Profit Method, Substantially All Disclosures and Statements of Cash Flows Omitted
      • APPENDIX 7B-8: Compilation--Departure from GAAP, Use of FIFO at Interim Date for a Company on LIFO
      • APPENDIX 7B-9: Compilation--Departure from the Revenue Recognition Principle Used in the Year-end Financial Statements, Statement of Cash Flows Omitted
      • APPENDIX 7B-10: Compilation--Departure from GAAP, No Income Tax Accrual or Change in Inventory, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 7B-11: Comparative Financial Statements--Current Month Compilation Compared to Year-to-date Review, Statements of Cash Flows Omitted
      • APPENDIX 7B-12: Compilation--Departure from GAAP, Accounts Receivable and Accounts Payable Not Recorded, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 7B-13: Compilation--Current Period Balance Sheet, Month and Year-to-date Comparative Income Statements Accompanied by Expired Budgeted Information for the Current Period, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 7B-14: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows, Deferred Taxes, and Substantially All Disclosures
      • APPENDIX 7B-15: Compilation--Month and Year-to-date, Omission of Statement of Cash Flows, Depreciation Expense, and Substantially All Disclosures
      • APPENDIX 7B-16: Review--Year-to-date Interim Period
      • APPENDIX 7B-17: Review--Year-to-date Statement of Cash Flows Omitted
      • APPENDIX 7B-18: Review--Quarter and Year-to-date
    • APPENDIX 7C: Illustrative Interim Financial Statements--S Corporation--Compiled, Income Tax Basis, Interim Financial Statements with Disclosures Omitted, Prepared Using Accounting Software Package
  • CHAPTER 8: FINANCIAL STATEMENTS PRESENTED ON AN OTHER COMPREHENSIVE BASIS OF ACCOUNTING
    • 800 GENERAL BACKGROUND INFORMATION
    • 801 OCBOA AND ACCOUNTING STANDARDS
      • Standards Overload
      • Authoritative Literature
    • 802 DECIDING WHEN TO USE AN OCBOA
      • Cash and Modified Cash Bases
      • Tax Basis
    • 803 DEFINITIONS
      • Cash or Modified Cash Basis
      • Tax Basis
        • Presentation of Income Taxes.
    • 804 USE OF DIFFERENT BASES OF ACCOUNTING
      • Change in Basis of Accounting
      • Use of Different Bases of Accounting for Financial Statements of the Same Period
    • 805 STATEMENT TITLES FOR CASH AND TAX BASIS FINANCIAL STATEMENTS
    • 806 STATEMENT OF CASH FLOWS
    • 807 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
    • 808 STATEMENT OF RETAINED EARNINGS
    • 809 COMPREHENSIVE INCOME
    • 810 PRESENTATION CONSIDERATIONS
      • Captions within OCBOA Financial Statements
      • Nontaxable Revenues and Nondeductible Expenses in Tax Basis Financial Statements
    • 811 DISCLOSURE OF BASIS OF ACCOUNTING
      • Compiled OCBOA Financial Statements that Omit Substantially All Disclosures
      • Example Notes
    • 812 OTHER DISCLOSURES IN OCBOA PRESENTATIONS
      • Authoritative Literature
      • Disclosure of the Basis of Presentation
      • Disclosures for Similar GAAP Items
      • Other Informative Disclosures Required by GAAP
      • Summary of Significant Accounting Policies
    • 813 CASH TO ACCRUAL CONVERSIONS
    • 814 ILLUSTRATIVE FINANCIAL STATEMENTS
    • 815 SAMPLE ENGAGEMENT AND REPRESENTATION LETTERS
    • 816 SAMPLE ACCOUNTANT'S REPORTS
    • APPENDIX 8A: Engagement Letters for OCBOA Financial Statements
      • APPENDIX 8A-1: Engagement Letter--Compilation of OCBOA Financial Statements
      • APPENDIX 8A-2: Engagement Letter--Review of OCBOA Financial Statements
    • APPENDIX 8B: Representation Letter--OCBOA Financial Statements
    • APPENDIX 8C: Illustrative Financial Statements
      • APPENDIX 8C-1: Compiled Cash Basis--Substantially All Disclosures Omitted
      • APPENDIX 8C-2: Compiled Tax Basis--Full Disclosure
      • APPENDIX 8C-3: Compiled (Pure) Cash Basis--Substantially All Disclosures Omitted
    • APPENDIX 8D: Compilation Reports for Cash Basis Corporations
      • APPENDIX 8D-1: Compilation--Standard Report on Cash Basis Financial Statements
      • APPENDIX 8D-2: Compilation--Cash Basis, Lack of Independence
      • APPENDIX 8D-3: Compilation--Cash Basis, Substantially All Disclosures Omitted
      • APPENDIX 8D-4: Compilation--Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined
      • APPENDIX 8D-5: Compilation--Cash Basis, Departure from the Cash Basis (Land Recorded at Appraised Value), Impact of the Departure Not Determined
      • APPENDIX 8D-6: Compilation--Cash Basis Statement of Assets, Liabilities, and Equity Only
      • APPENDIX 8D-7: Compilation--Cash Basis, Supplementary Information Compiled
      • APPENDIX 8D-8: Compilation--Cash Basis Statement of Revenues and Expenses and Retained Earnings Only
      • APPENDIX 8D-9: Compilation--Statement of Cash Receipts and Disbursements Only
    • APPENDIX 8E: Compilation Reports for Tax Basis Corporations
      • APPENDIX 8E-1: Compilation--Standard Report on Tax Basis Financial Statements
      • APPENDIX 8E-2: Compilation--Tax Basis, Lack of Independence
      • APPENDIX 8E-3: Compilation--Tax Basis, Substantially All Disclosures Omitted
      • APPENDIX 8E-4: Compilation--Tax Basis Statement of Assets, Liabilities, and Equity Only
      • APPENDIX 8E-5: Compilation--Tax Basis, Supplementary Information Compiled
      • APPENDIX 8E-6: Compilation--Tax Basis, Interim Financial Statements, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
      • APPENDIX 8E-7: Compilation--Tax Basis, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Income Tax Provision), Impact of Departure Not Determined
      • APPENDIX 8E-8: Compilation--Tax Basis, Substantially All Disclosures Omitted, Departure from the Tax Basis (Accounts Receivable and Accounts Payable Not Recorded), Impact of Departure Not Determined
      • APPENDIX 8E-9: Compilation--Comparative Income Tax Basis Month and Year-to-date Financial Statements, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
    • APPENDIX 8F: Review Reports for Cash Basis Corporations
      • APPENDIX 8F-1: Review--Standard Report on Cash Basis Financial Statements
      • APPENDIX 8F-2: Review--Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined
      • APPENDIX 8F-3: Review--Cash Basis Statement of Assets, Liabilities, and Equity Only
      • APPENDIX 8F-4: Review--Cash Basis, Supplementary Information Covered by Review Procedures
      • APPENDIX 8F-5: Review--Cash Basis, Supplementary Information Not Covered by Review Procedures
      • APPENDIX 8F-6: Review--Statement of Cash Receipts and Disbursements Only
    • APPENDIX 8G: Review Reports for Tax Basis Corporations
      • APPENDIX 8G-1: Review--Standard Report on Tax Basis Financial Statements
      • APPENDIX 8G-2: Review--Tax Basis Statement of Assets, Liabilities, and Equity Only
      • APPENDIX 8G-3: Review--Tax Basis, Supplementary Information Covered by Review Procedures
      • APPENDIX 8G-4: Review--Tax Basis, Supplementary Information Not Covered by Review Procedures
      • APPENDIX 8G-5: Review--Tax Basis, Interim Financial Statements, Departure from the Tax Basis (Omission of Depreciation Expense), Impact of the Departure Not Determined
  • CHAPTER 9: PERSONAL FINANCIAL STATEMENTS
    • 900 GENERAL
      • Personal Financial Statements Guidance
      • Two-column Presentation (Estimated Current Value and Historical Costs)
    • 901 ENTITY TO BE COVERED
      • Ownership Information
    • 902 BASIS OF PRESENTATION
      • Estimated Current Value Basis
      • Cash or Accrual?
      • Other Comprehensive Bases of Accounting
    • 903 FORM AND CONTENT
      • Statement of Financial Condition
      • Statement of Changes in Net Worth
      • Comparative Financial Statements
      • Business Interests
      • Problems When Financial Statements Are Not Available
      • Personal Effects
      • Future Interests
      • Social Security Benefits
      • Noncancelable Commitments
      • Income Taxes Payable
      • Disclosures
        • Contingencies, Risks, and Uncertainties.
    • 904 ESTIMATED CURRENT VALUE BASIS OF ACCOUNTING
      • Definitions
      • Methods of Determining Estimated Current Value
      • Consistency in the Application of the Methods
      • Suggested Methods for Specific Assets
      • Range of Values
      • Estimated Income Taxes on Differences between Estimated Current Values and Amounts and Tax Bases
    • 905 PERSONAL FINANCIAL STATEMENT ENGAGEMENTS
      • General
      • Acceptance of Clients
      • Engagement Letters
      • Inadequate Accounting Records/Gathering Information
      • Personal Financial Statements Worksheet
      • Client Representation Letters
      • Inability to Obtain Tax Bases of Assets
    • 906 COMPILATION OF PERSONAL FINANCIAL STATEMENTS
      • Applicability of SSARS
      • Responsibility for Estimated Current Values
      • Personal Financial Statements Worksheet
      • Personal Financial Statements Intended for Client Use Only
    • 907 REVIEWS OF PERSONAL FINANCIAL STATEMENTS
      • Applicability of SSARS No. 19
      • General Requirements
      • Inquiry and Analytical Procedures
      • Reading the Financial Statements
      • Obtaining a Representation Letter
      • Personal Financial Statements Worksheet and Addendum for Review Engagements
    • 908 REPORTING ON COMPILED OR REVIEWED PERSONAL FINANCIAL STATEMENTS
      • The Standard Reports
      • Compiled Personal Financial Statements That Omit Substantially All Disclosures
      • GAAP Departures
      • Quantification of the Effect of a Financial Reporting Framework Departure
      • GAAP Consistency Departures
      • Uncertainties
      • Scope Limitations
      • Reference to Internal Control
      • Examples of Accountant's Reports
    • 909 CASE STUDIES
      • Computation of the Income Tax Liabilities--A Typical Engagement
        • Facts.
        • The Current Tax Liability.
        • The Estimated Future Tax Liability.
      • Recognition of an Interest in a Trust
      • Interest in a Testamentary Trust
        • Jane's Income Beneficiary Value.
        • Rett's Remainderman Value.
        • The Value of the Trust in Combined Families' Financial Statements.
      • Wealthy Individual Does Not Desire to Present All of His Assets
      • Elimination of an Individual's Receivables or Payables on the Financial Statements of a Closely Held Business
      • Elimination of Profit in Assets Sold to a Closely Held Company
      • Problems with Historical Cost Presentations
        • Impairment of Long-lived Assets.
        • Omission of Deferred Taxes.
      • The CPA Prepares His Own Personal Financial Statements
    • 910 ILLUSTRATIVE PERSONAL FINANCIAL STATEMENTS
    • APPENDIX 9A: Engagement Letters
      • APPENDIX 9A-1: Engagement Letter--Compilation of Personal Financial Statements
      • APPENDIX 9A-2: Engagement Letter--Review of Personal Financial Statements
    • APPENDIX 9B: Personal Financial Statement Preparer's Worksheet
    • APPENDIX 9C: Addendum to Preparer's Worksheet for Reviewed Personal Financial Statements
    • APPENDIX 9D: Disclosure Checklist for Personal Financial Statements
    • APPENDIX 9E: Illustrative Personal Financial Statements Client Representation Letters
      • APPENDIX 9E-1: Illustrative Client Representation Letter for Use in a Compilation of Personal Financial Statements
      • APPENDIX 9E-2: Illustrative Client Representation Letter for Use in a Review of Personal Financial Statements
    • APPENDIX 9F: Illustrative Personal Financial Statements
      • APPENDIX 9F-1: Illustrative Personal Financial Statements Adapted from FASB ASC 274
      • APPENDIX 9F-2: Computing the Excess of the Estimated Current Values of Assets over Their Tax Bases and the Estimated Income Taxes on the Excess
    • APPENDIX 9G: Compilation Reports for Personal Financial Statements
      • APPENDIX 9G-1: Compilation--Standard Report
      • APPENDIX 9G-2: Compilation--Statement of Changes in Net Worth Included
      • APPENDIX 9G-3: Compilation--Accountant Is Not Independent
      • APPENDIX 9G-4: Compilation--Substantially All Disclosures Omitted
      • APPENDIX 9G-5: Compilation--Departure from GAAP, Failure to Include a Provision for Income Taxes on Net Unrealized Appreciation
      • APPENDIX 9G-6: Compilation--Departure from GAAP, Failure to Segregate Community Property in the Statement of Financial Condition of a Husband Only
      • APPENDIX 9G-7: Compilation--Personal Financial Statement with Supplementary Information
      • APPENDIX 9G-8: Compilation--Income Tax Basis
      • APPENDIX 9G-9: Compilation--Historical Costs as Supplementary Information
      • APPENDIX 9G-10: Compilation--Departure from GAAP, Change in the Method of Computing Estimated Current Values at Client's Discretion
      • APPENDIX 9G-11: Compilation--Departure from GAAP, Material Asset at Cost
      • APPENDIX 9G-12: Compilation--Departure from GAAP, Inappropriate Valuation Method
    • APPENDIX 9H: Review Reports for Personal Financial Statements
      • APPENDIX 9H-1: Review--Standard Report
      • APPENDIX 9H-2: Review--Statement of Changes in Net Worth Included
      • APPENDIX 9H-3: Review--Departure from GAAP, Financial Statements Prepared for Husband Only but Include Wife's Separate Property
      • APPENDIX 9H-4: Review--Departure from GAAP, Failure to Include a Provision for Income Taxes on Net Unrealized Appreciation
      • APPENDIX 9H-5: Review--Supplementary Information Reviewed
      • APPENDIX 9H-6: Review--Supplementary Information Compiled
      • APPENDIX 9H-7: Review--Income Tax Basis
      • APPENDIX 9H-8: Review--Historical Costs as Supplementary Information
      • APPENDIX 9H-9: Review--Departure from GAAP, Failure to Disclose Summarized Financial Information for an Investment in a Closely Held Business
  • CHAPTER 10: PROPRIETORSHIPS
    • 1000 GENERAL
    • 1001 SEGREGATING PROPRIETORSHIP AND PERSONAL ACCOUNTS
    • 1002 FEDERAL INCOME TAXES
    • 1003 CASH BASIS AND TAX BASIS STATEMENTS
    • 1004 EQUITY SECTION OF BALANCE SHEET
    • 1005 STATEMENT OF CHANGES IN PROPRIETOR'S CAPITAL
      • General Requirements
      • Disclosure with Statement of Income
      • Disclosure in a Separate Statement
      • Disclosure in Notes to Financial Statements
    • 1006 CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
    • 1007 SELF-EMPLOYED RETIREMENT PLANS
    • 1008 ILLUSTRATIVE FINANCIAL STATEMENTS
    • 1009 SAMPLE ACCOUNTANT'S REPORTS
    • APPENDIX 10A: Illustrative Financial Statements for Proprietorships
      • APPENDIX 10A-1: Proprietorship--Compiled, Accrual Basis, Comparative Financial Statements with Full Disclosures
      • APPENDIX 10A-2: Proprietorship--Compiled, Income Tax Basis, Single Year Financial Statements with Disclosures Omitted
    • APPENDIX 10B: Compilation Reports for Proprietorships
      • APPENDIX 10B-1: Compilation--Proprietorship on the Accrual Basis of Accounting
      • APPENDIX 10B-2: Compilation--Proprietorship on the Cash Basis of Accounting
      • APPENDIX 10B-3: Compilation--Proprietorship on the Tax Basis of Accounting
      • APPENDIX 10B-4: Compilation--Proprietorship on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
      • APPENDIX 10B-5: Compilation--Proprietorship on Accrual Basis of Accounting, Statement of Cash Flows Omitted
      • APPENDIX 10B-6: Compilation--Proprietorship on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
    • APPENDIX 10C: Review Reports for Proprietorships
      • APPENDIX 10C-1: Review--Proprietorship on the Accrual Basis of Accounting
      • APPENDIX 10C-2: Review--Proprietorship on the Cash Basis of Accounting
      • APPENDIX 10C-3: Review--Proprietorship on the Tax Basis of Accounting
      • APPENDIX 10C-4: Review--Proprietorship on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
  • CHAPTER 11: PARTNERSHIPS
    • 1100 SELECTING AN ACCOUNTING BASIS
    • 1101 SPECIAL ACCOUNTING TREATMENT SPECIFIED IN AGREEMENT OR HYBRID ACCOUNTING METHODS
      • Special-purpose Report Based on the Basis of Accounting Specified in the Partnership Agreement
      • Financial Statements Prepared on a Basis of Accounting Specified in the Partnership Agreement Intended for General Use
      • Client Interpretations of the Partnership Agreement
    • 1102 FEDERAL INCOME TAXES
      • Accounting for Uncertainty in Income Tax and Partnerships
    • 1103 STATE INCOME AND FRANCHISE TAXES
    • 1104 GUARANTEED PAYMENTS TO PARTNERS
    • 1105 LOANS BETWEEN PARTNERS AND THE PARTNERSHIP
    • 1106 EQUITY SECTION OF THE BALANCE SHEET
    • 1107 STATEMENT OF CHANGES IN PARTNERS' CAPITAL
    • 1108 CHANGES IN PARTNERSHIP INTEREST
    • 1109 ACCOUNTING FOR INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES
    • 1110 ACCOUNTING FOR PARTNERSHIP RETIREMENT PLANS
    • 1111 ILLUSTRATIVE FINANCIAL STATEMENTS AND SAMPLE ACCOUNTANTS' REPORTS FOR PARTNERSHIPS
    • 1112 CHANGE IN LEGAL FORM OF ENTITY
    • 1113 LIMITED LIABILITY COMPANIES
      • Advantages and Disadvantages of LLCs
        • Advantages.
        • Disadvantages.
        • Assisting Clients.
      • Organization
        • Articles of Organization.
        • Operating Agreement.
      • General Tax Treatment
        • Single-member LLCs.
        • Default Classification Rules.
        • Conversion of an Existing Entity to an LLC.
      • Accounting and Reporting Issues
        • Financial Statement Headings.
        • Federal Income Taxes.
        • State Income and Franchise Taxes.
        • Equity Section of the Balance Sheet.
        • Conversion of an Existing Entity to an LLC.
        • Comparative Financial Statements.
        • LLC Disclosure Requirements.
        • Formation of an LLC.
        • Disclosure of Change in Legal Form and/or Tax Status.
        • Illustrative Financial Statements and Sample Accountants' Reports for Limited Liability Companies.
        • Single-member LLCs.
    • 1114 LIMITED LIABILITY PARTNERSHIPS
      • Advantages and Disadvantages of LLPs
        • Advantages.
        • Disadvantages.
        • LLPs Compared to LLCs.
      • Accounting and Reporting Issues
    • APPENDIX 11A: Illustrative Financial Statements
      • APPENDIX 11A-1: Partnership--Compiled, Income Tax Basis, Full Disclosure
      • APPENDIX 11A-2: Partnership--Compiled, Accrual Basis, Full Disclosure
      • APPENDIX 11A-3: Limited Liability Company--Compiled, Income Tax Basis, Full Disclosure
    • APPENDIX 11B: Compilation Reports for Partnerships
      • APPENDIX 11B-1: Compilation--Partnership on the Accrual Basis of Accounting
      • APPENDIX 11B-2: Compilation--Partnership on the Cash Basis of Accounting
      • APPENDIX 11B-3: Compilation--Partnership on the Tax Basis of Accounting
      • APPENDIX 11B-4: Compilation--Partnership on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
      • APPENDIX 11B-5: Compilation--Partnership on Accrual Basis of Accounting, Statement of Cash Flows Omitted
      • APPENDIX 11B-6: Compilation--Partnership on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
    • APPENDIX 11C: Review Reports for Partnerships
      • APPENDIX 11C-1: Review--Partnership on the Accrual Basis of Accounting
      • APPENDIX 11C-2: Review--Partnership on the Cash Basis of Accounting
      • APPENDIX 11C-3: Review--Partnership on the Tax Basis of Accounting
      • APPENDIX 11C-4: Review--Partnership on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
    • APPENDIX 11D: Compilation Reports for Limited Liability Companies
      • APPENDIX 11D-1: Compilation--Limited Liability Company on the Accrual Basis of Accounting
      • APPENDIX 11D-2: Compilation--Limited Liability Company on the Cash Basis of Accounting
      • APPENDIX 11D-3: Compilation--Limited Liability Company on the Income Tax Basis of Accounting
      • APPENDIX 11D-4: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Substantially All Disclosures Omitted
      • APPENDIX 11D-5: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
      • APPENDIX 11D-6: Compilation--Limited Liability Company on the Accrual Basis of Accounting, Substantially All Disclosures and Statement of Cash Flows Omitted
      • APPENDIX 11D-7: Compilation--Single-member Limited Liability Company on the Accrual Basis of Accounting
    • APPENDIX 11E: Review Reports for Limited Liability Companies
      • APPENDIX 11E-1: Review--Limited Liability Company on the Accrual Basis of Accounting
      • APPENDIX 11E-2: Review--Limited Liability Company on the Cash Basis of Accounting
      • APPENDIX 11E-3: Review--Limited Liability Company on the Income Tax Basis of Accounting
      • APPENDIX 11E-4: Review--Limited Liability Company on the Accrual Basis of Accounting, Statement of Cash Flows Omitted
      • APPENDIX 11E-5: Review--Single-member Limited Liability Company on the Accrual Basis of Accounting
    • APPENDIX 11F: Illustrative Representation Letter--Partnerships
  • CHAPTER 12: S CORPORATIONS
    • 1200 GENERAL
    • 1201 FINANCIAL STATEMENT PRESENTATION
      • Balance Sheet
      • Statement of Income
      • Statement of Retained Earnings
      • Statement of Comprehensive Income
      • Statement of Cash Flows
      • Comparative Financial Statements
      • Summary of Unique Disclosures
      • S Corporation Tax Uncertainties
      • Illustrated Financial Statements
    • 1202 RETAINED EARNINGS ACCOUNTING PROCEDURES--GENERAL DISCUSSION
      • General Requirements
      • Terminology and Definitions
    • 1203 ILLUSTRATIONS FOR TRACKING SEPARATE RETAINED EARNINGS ACCOUNTS
      • Procedures for Newly Formed S Corporations
      • Procedures for Previous Conventional Corporations
      • Procedures for Previous Subchapter S Corporations
    • 1204 EFFECT OF LOSSES ON RETAINED EARNINGS ACCOUNTS
    • 1205 EFFECT OF TAX/BOOK DIFFERENCES ON RETAINED EARNINGS ACCOUNTS
      • Differences Originating after S Corporation Status Is Attained
      • Differences Originating before S Corporation Status Is Attained
      • Tax/Book Differences Existing When S Corporation Status Terminates
      • Tax Basis of Accounting
    • 1206 EFFECT OF TERMINATION OF THE S CORPORATION ELECTION ON RETAINED EARNINGS ACCOUNTS
      • General Accounting Procedures
      • Tax/Book Differences and Termination
    • 1207 COMPILATION AND REVIEW REPORTS OF S CORPORATIONS
    • APPENDIX 12A: Illustrative Financial Statements
    • APPENDIX 12B: Compilation Reports for S Corporations
      • APPENDIX 12B-1: Compilation--S Corporation on the Accrual Basis (Standard Report)
      • APPENDIX 12B-2: Compilation--S Corporation on the Cash Basis
      • APPENDIX 12B-3: Compilation--S Corporation on the Tax Basis
      • APPENDIX 12B-4: Compilation--S Corporation on the Accrual Basis, Substantially All Disclosures Omitted
      • APPENDIX 12B-5: Compilation--S Corporation on the Accrual Basis, Statement of Cash Flows Omitted
      • APPENDIX 12B-6: Compilation--S Corporation on the Accrual Basis, Substantially All Disclosures and Statement of Cash Flows Omitted
    • APPENDIX 12C: Review Reports for S Corporations
      • APPENDIX 12C-1: Review--S Corporation on the Accrual Basis (Standard Report)
      • APPENDIX 12C-2: Review--S Corporation on the Cash Basis
      • APPENDIX 12C-3: Review--S Corporation on the Tax Basis
      • APPENDIX 12C-4: Review--S Corporation on the Accrual Basis, Statement of Cash Flows Omitted
      • APPENDIX 12C-5: Review--S Corporation on the Accrual Basis, Supplementary Information Not Covered by Review Procedures
  • CHAPTER 13: PRESCRIBED FORMS
    • 1300 BACKGROUND
    • 1301 IMPORTANT PROVISIONS OF SSARS NO. 3
      • Definitions
      • The SSARS No. 3 Alternative Form of the Standard Compilation Report
      • Departures from GAAP or from the Prescribed Form
      • Signing a Preprinted Report Form
    • 1302 DETERMINING WHEN SSARS NO. 3 IS APPLICABLE
      • Does SSARS No. 3 Establish Different Standards for Compiling a Prescribed Form?
      • Is SSARS No. 3 Applicable to Review Engagements?
      • Is a Tax Return a Prescribed Form?
      • Does a Comprehensive Set of Instructions Constitute a Prescribed Form?
      • Is SSARS No. 3 Applicable to a Prescribed Form That Does Not Call for Departures from GAAP?
      • How Does a Prescribed Form Call for Departures from GAAP?
      • Can a SSARS No. 19 Report Be Issued Even If SSARS No. 3 Applies?
      • Is the SSARS No. 3 Report Appropriate When a Prescribed Form Is Presented to Other Third Parties?
    • 1303 APPLYING SSARS NO. 3 IN PRACTICE
      • If a CPA Previously Compiled a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
      • If a CPA Previously Reviewed a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
      • If a CPA Previously Audited a Financial Statement, Can He or She Compile a Prescribed Form Financial Statement for the Same Period?
      • If There Are Previously Issued Financial Statements, Does the CPA Have to Refer to the Previous Service in the Prescribed Form Report?
      • Can a CPA Attach Previously Compiled, Reviewed, or Audited Financial Statements to a Prescribed Form?
      • What Financial Reporting Framework Does a CPA Use If None Is Specified in the Form?
      • How Does Use of the Tax Basis or Cash Basis of Accounting Affect Financial Statements Included in Prescribed Forms?
      • Can an Accountant Perform a Review of Financial Statements Included in a Prescribed Form That Are Presented on a Basis Other Than GAAP?
      • What Does a CPA Do When Financial Statements Presented on an OCBOA Are Included in the Prescribed Form and It Uses the Terms Balance Sheet, Statement of Income, etc.?
      • What Is a CPA's Reporting Obligation for Information Presented for Supplementary Analysis Purposes?
      • What Is the Definition of Information Presented for Supplementary Analysis Purposes?
      • How Should a CPA Report on Projected Income Information Included in a Prescribed Form or as Supplementary Information to a Prescribed Form?
      • How Does a CPA Report on a Prescribed Form That Requires Only Elements, Accounts, or Items of a Financial Statement?
      • What If the Form Is in Accordance with GAAP Except for Disclosures?
      • When Should a CPA Describe or Name the Form in the SSARS No. 3 Report?
      • How Should a CPA Report on Comparative Financial Statements Included in a Prescribed Form?
      • What If a CPA Is Not Independent?
      • Does a CPA Have to Mark "See Accountant's Compilation Report" on Each Page of the Prescribed Form?
      • Does SSARS No. 3 Provide the Latitude to Vary from the Wording of the Report?
      • Is SSARS No. 3 Reporting Appropriate for Prescribed Forms Submitted to the NASD or NYSE by Privately Owned Brokers or Securities Dealers?
      • Is SSARS No. 3 Reporting Appropriate If a Prescribed Form That Calls for GAAP Departures Is Required by a Contractual Agreement?
    • APPENDIX 13A: Illustrative Engagement Letter--Compilation of Financial Statements in a Prescribed Form
    • APPENDIX 13B: Illustrated Prescribed Form with Keyed Explanatory Notes
    • APPENDIX 13C: Compilation Reports on Financial Statements on Prescribed Forms
      • APPENDIX 13C-1: Prescribed Form Report--Standard Report on Financial Statements Included in a Prescribed Form
      • APPENDIX 13C-2: Prescribed Form Report--Standard Report on Personal Financial Statements
      • APPENDIX 13C-3: Prescribed Form Report--Personal Financial Statements, Departure from the Prescribed Form
      • APPENDIX 13C-4: Prescribed Form Report--Business Entity Financial Statements, Departure from the Prescribed Form
      • APPENDIX 13C-5: Prescribed Form Report--Personal Financial Statements, Departure from GAAP Not Called for by the Prescribed Form
      • APPENDIX 13C-6: Prescribed Form Report--Business Entity Financial Statements, Departure from GAAP Not Called for by the Prescribed Form
      • APPENDIX 13C-7: Prescribed Form Report--Personal Financial Statements, Accountant Has Compiled All Supplementary Information
      • APPENDIX 13C-8: Prescribed Form Report--Personal Financial Statements, Accountant Has Not Compiled Any of the Supplementary Information
      • APPENDIX 13C-9: Prescribed Form Report--Personal Financial Statements, Accountant Has Compiled Some, But Not All, of the Supplementary Information
      • APPENDIX 13C-10: Prescribed Form Report--Financial Statements Extracted from Previously Reviewed Financial Statements
      • APPENDIX 13C-11: Prescribed Form Report--Financial Statements Extracted from Previously Audited Financial Statements
      • APPENDIX 13C-12: Prescribed Form Report--Financial Statements on the Income Tax Basis
      • APPENDIX 13C-13: Prescribed Form Report--Financial Statements on the Cash Basis
      • APPENDIX 13C-14: Prescribed Form Report--Specified Elements, Items, or Accounts Included in a Prescribed Form That Does Not Contain Financial Statements
      • APPENDIX 13C-15: Prescribed Form Report--Comparative Financial Statements Included in a Prescribed Form
      • APPENDIX 13C-16: Prescribed Form Report--Standard Report on Financial Statements Included in a Prescribed Form That Calls for a Presentation Departure from GAAP
      • APPENDIX 13C-17: Prescribed Form Report--Prepared in Accordance with a Special Purpose Framework Prescribed by Contract or Regulation and That Framework Prescribes a Format for the Financial Information
  • CHAPTER 14: FORECASTS, PROJECTIONS, AND SIMILAR ITEMS
    • 1400 INTRODUCTION
      • How to Use This Chapter
    • 1401 AUTHORITATIVE LITERATURE
      • Statement on Standards for Attestation Engagements
        • AT 101, Attest Engagements.
        • AT 301, Financial Forecasts and Projections.
        • Amendment to AT 301 Made by SSAE No. 17, Reporting on Compiled Prospective Financial Statements When the Practitioner's Independence is Impaired.
        • AT 201, Agreed-Upon Procedures Engagements.
        • SSAE No. 13, Defining Professional Requirements in Statements on Standards for Attestation Engagements (AT 20).
        • SSAE No. 14, SSAE Hierarchy (AT 50).
      • AICPA Guide: Prospective Financial Information
    • 1402 OVERVIEW OF GUIDANCE
      • What Are the Various Engagements?
        • Internal Use Engagements.
        • Plain Paper.
        • Written Communication.
        • Assembly Report.
        • Third-party Use Engagements.
        • Special Disclaimer on Budgets.
        • Compilation Engagements.
        • Agreed-upon Procedures Engagements.
        • Examination Engagements.
        • Circular 230 Engagements.
      • Which Engagement Is Appropriate for Your Client?
        • Who Is Likely to Use the Presentation?
        • Is It a Complete or Partial Presentation?
        • Flowchart to Selecting the Engagement.
      • Definitions and Their Impact on Your Engagement
        • Presentation Formats--Complete or Partial.
        • Types of Prospective Information--Forecasts or Projections.
        • Financial Forecast.
        • Financial Projection.
        • Forecast versus Projection.
        • General Use, Limited Use, and Internal Use.
        • Other Terms Used to Describe Prospective Information.
      • Note Disclosure Requirements
      • Applicability of SSARS to Prospective Information
      • Do Peer Reviews Apply to Engagements on Prospective Information?
      • Applicability of Statements on Standards for Valuation Services to Prospective Engagements
      • Summary of Recommendations
      • Engagement Understanding
        • Required Understanding with the Client.
        • Documenting the Understanding.
        • Third-party Use Engagements.
        • Internal Use Only Engagements.
        • Are Engagement Letters Required?
      • Independence Considerations in Engagements to Report on Prospective Financial Information
    • 1403 KEY FACTORS AND SIGNIFICANT ASSUMPTIONS
      • Key Factors
      • Significant Assumptions
      • Subjective Assumptions
      • Assumptions for a Financial Forecast
        • Assessing Whether Information Is the Best Available.
        • Assessing Whether Assumptions Are Appropriate.
      • Assumptions for a Projection
    • 1404 FORMAT AND PRESENTATION GUIDELINES
      • Title for a Financial Forecast
      • Title for a Financial Projection
      • Identification of the Period Presented--Forecasts and Projections
      • Title for Prospective and Historical Information Presented Together
      • Format for a Forecast or Projection
        • Preferred Format.
        • Complete Presentation.
        • Partial Presentation.
      • Significant Changes in Financial Position and Cash Flows
      • Presentation of Amounts
      • Introduction to Summary of Significant Assumptions
      • Date of Preparation of Prospective Information
      • Summary of Significant Assumptions
      • Reference to the Summary of Significant Assumptions
      • Disclosure of Assumptions in Computer-prepared Presentations
      • Summary of Significant Accounting Policies
      • Accounting Principles
      • Different Basis of Accounting Used in a Prospective Presentation
      • Period to Be Covered by a Forecast or Projection
      • Disclosing Information about Periods beyond the Forecast Period
      • Correcting and Updating a Prospective Financial Presentation
      • Performance, Presentation, and Reporting Checklists
      • Illustrations
    • 1405 PLAIN PAPER ENGAGEMENTS
      • Definition
      • Authoritative Basis for Plain Paper Engagements
      • Procedure, Presentation, Disclosure, and Reporting Requirements
      • Transmittal Letters and Other Written Communication
      • Workpapers for a Plain Paper Engagement
    • 1406 ASSEMBLY ENGAGEMENTS
      • Assembly Procedures
      • Workpapers for an Assembly Engagement
        • Assembly Checklists.
      • Assembly Reports
      • Modifications to the Assembly Report
    • 1407 SPECIAL DISCLAIMER FOR BUDGETS
    • 1408 COMPILATION ENGAGEMENTS
      • Definition
        • Partial Presentations.
        • Disclosures about Periods beyond the Forecast Period.
      • Summary of Significant Assumptions
      • Performance Standards
        • Training and Proficiency.
        • Planning.
        • Detailed Procedures.
      • Workpapers for Compilation Engagements
        • Engagement Letter.
        • Illustrations of Engagement Letters.
        • Knowledge about the Client, Industry, and Key Factors.
        • Compilation Checklists.
        • Copy of Prospective Presentation and Related Worksheets.
        • List of Significant Assumptions.
        • Representation Letter.
      • When to Withdraw from a Compilation Engagement
      • Compilation Reports--Basic Ingredients
      • Modifications of the Standard Compilation Report
        • Omission of Significant Assumptions Not Allowed.
        • Summary of Significant Accounting Policies Omitted.
        • Presentation Deficiencies.
        • Report When the Presentation Contains a Measurement Departure.
      • Reporting on a Financial Forecast That Includes Disclosures about Periods beyond the Forecast Period
      • Report When the Compilation Engagement Includes Other Services
      • Compilation Report When OCBOA Is Not Disclosed
      • Compilation Report When Accountant Is Not Independent
    • 1409 PARTIAL PRESENTATIONS
      • Definition
      • When Are They Appropriate?
    • 1410 MISCELLANEOUS MATTERS
      • Preliminary Drafts
      • Prospective Information Presented along with Historical Financial Statements
        • Accountant-submitted Documents.
        • Client-prepared Documents.
        • Presenting Both Prospective and Historical Statements for Internal Use.
      • Subjective Assumptions with No Reasonably Objective Basis
      • Other Information
    • APPENDIX 14A: Illustrative Prospective Financial Statements
      • APPENDIX 14A-1: Abernathy Press--Historical and Forecasted Financial Statements
      • APPENDIX 14A-2: XYZ Company, Inc.--Summarized Financial Information
    • APPENDIX 14B: Checklists and Practice Aids
      • APPENDIX 14B-1: Internal Use Checklist--Prospective Financial Information
      • APPENDIX 14B-2: Compilation Procedures, Review, and Approval Form--Prospective Financial Information
      • APPENDIX 14B-3: Presentation and Disclosure Checklist--Forecast and Projection Engagements
      • APPENDIX 14B-4: Engagement Quality Control and Technical Review Form--Forecast and Projection Engagements
    • APPENDIX 14C: Illustrative Engagement and Representation Letters
      • APPENDIX 14C-1: Illustrative Engagement Letter--Assembly of a Forecast and SSARS Compilation of Historicals
      • APPENDIX 14C-2: Illustrative Engagement Letter--Compilation of a Forecast
      • APPENDIX 14C-3: Illustrative Representation Letter--Compilation of a Forecast
    • APPENDIX 14D: Reports on Prospective Presentations
      • APPENDIX 14D-1: Report on Assembly--Forecast
      • APPENDIX 14D-2: Report on Assembly--Compiled Historical Financial Statements That Omit Substantially All Disclosures Presented with a Forecast
      • APPENDIX 14D-3: Report on Compilation--Forecast
      • APPENDIX 14D-4: Report on Compilation--Historical Financial Statements and Forecast
      • APPENDIX 14D-5: Report on Compilation--Interim Historical Financial Statements Accompanied by a Financial Forecast Labeled as a Budget
  • CHAPTER 15: PERSONAL FINANCIAL PLANS
    • 1500 INTRODUCTION
    • 1501 AICPA AUTHORITATIVE LITERATURE
      • Approach Taken in This Chapter
      • Components of an Internal Use Financial Plan
      • Historical Personal Financial Statements
        • Authoritative Literature.
        • Engagement Letters.
        • The Accountant's Report.
        • Supplementary Information.
      • Prospective Personal Financial Information
        • What Guidance Applies to the Prospective Presentations?
      • Tax Advice in the Financial Plan
      • Other Advice in the Financial Plan
      • Accountant's Report
      • Management Consulting Standards
      • Federal Trade Commission's (FTC's) Privacy Disclosure Rules
    • APPENDIX 15A: Sample Engagement Letter
    • APPENDIX 15B: Accountant's Report--Internal Use Financial Plan
    • APPENDIX 15C: Sample Privacy Notice
  • CHAPTER 16: ESTATES AND TRUSTS
    • 1600 INTRODUCTION
      • The Need for Guidance
      • Additional Guidance
      • Key Issues
    • 1601 DEFINITIONS AND CHARACTERISTICS
      • Definitions
      • Characteristics
    • 1602 DOES SSARS NO. 19 APPLY?
      • The Answer Varies by Type of Engagement
      • Reporting Directly to a Court of Law
      • Tax Return Engagements
      • Is the Accountant Acting as a Public Accountant?
        • Reporting Options under Interpretation No. 8 of AR 80.
    • 1603 WHAT IS GAAP?--A SURVEY OF EXISTING LITERATURE
      • GAAP for Fiduciary Accounting Is Not Clear-cut
        • The FASB Accounting Standards Codification.
      • The Uniform Principal and Income Acts
        • State Statutes.
      • Committee on National Fiduciary Accounting Standards
        • Fundamental Accounting Objective.
        • Fiduciary Accounting Principles.
        • Model Accounts.
      • Other Literature
      • A Recap of Emerging Principles That Can Be Categorized as GAAP
    • 1604 REPORTING ALTERNATIVES AND BASES OF ACCOUNTING
      • Introduction--SSARS Reporting
      • Reporting in Accordance with GAAP
        • GAAP Disclosure Requirements.
        • Departures from GAAP.
      • Reporting in Accordance with the Terms of an Agreement That Specifies the Basis of Accounting
        • Disclosure Requirements.
      • Other Reporting Alternatives and Bases of Accounting
        • Reporting on a Prescribed Form.
        • Reporting on the Cash Basis.
        • Reporting on the Income Tax Basis.
      • Recap of Reporting Alternatives--Basis of Accounting
      • Recap of Reporting Alternatives--Compilations and Reviews
    • 1605 FINANCIAL STATEMENTS OF AN ESTATE OR TRUST
      • Presentation Format
      • Illustrative Financial Statements
    • APPENDIX 16A: Model Financial Statements for an Estate
    • APPENDIX 16B: Model Financial Statements for a Trust
    • APPENDIX 16C: Illustrative Financial Statements for a Trust--Income Tax Basis
    • APPENDIX 16D: Financial Statements Submitted to a Court of Law
    • APPENDIX 16E: Sample SSARS Reports
      • APPENDIX 16E-1: Compilation--in Accordance with GAAP
      • APPENDIX 16E-2: Review--in Accordance with GAAP
  • CPE & Training Solutions
  • INDEX
  • SMART Compilation and Review Brochure View
  • Guide to Compilation and Review Engagements Sample View
  • Guide to Compilation and Review Engagements: List of Substantive Changes View