SSARS No. 11: Compilation or Review of a Nonpublic Entity
By Gary A. Porter, CPA
The AICPA issued Statement on Standards for Accounting and Review Services (SSARS) No. 11 to provide general guidance in light of new standards issued by the Public Company Accounting Oversight Board (PCAOB). While this may seem redundant, it is necessary because SSARS statements apply to nonpublic companies only, while standards issued by the PCAOB apply to public companies.
SSARS No. 11 indicates that an accountant must perform a compilation or review of a nonpublic entity in accordance with SSARS statements as issued by the AICPA. The standard goes on to state that the accountant should have sufficient knowledge of SSARS statements to identify those that are applicable to his or her engagement. The statements require the accountant to exercise professional judgment in applying them and to be prepared to justify departures from the statements.
SSARS No. 11 also clarifies that interpretations of these publications consist of Compilation and Review Interpretations of the SSARS, appendixes to the SSARS statements, compilation and review guidance included in the AICPA Audit and Accounting Guides, and the AICPA Statements of Position to the extent that those statements are applicable to compilation and review engagements.
SSARS No. 11 further describes the content of other competent compilation and review publications, including the AICPA’s annual compilation and review alert; the Journal of Accountancy; other professional journals’ compilation and review articles in the AICPA CPA letter; continuing professional education programs; other instructional materials, textbooks, guidebooks, compilation and review programs, and checklists, and other compilation and review publications from state CPA societies; and other organizations and individuals. Other compilation and review publications have no authoritative status, but they may help the accountant understand and apply the statements.
SSARS No. 11 also verifies the accountant’s obligation with respect to a predecessor’s compilation or review report. The successor accountant should not name the predecessor account in his or her report unless the predecessor accountant’s practice was acquired by or merged with that of the successor accountant.
SSARS No. 11 has been in effect since August 2004.
Gary Porter, CPA began his accounting career with the national CPA firm Touche Ross in 1971. He is licensed by the California Board of Accountancy and the Nevada Board of Accountancy. Mr. Porter has restricted his practice to work only with Common Interest Realty Associations (CIRAs), including homeowners associations, condominium associations, property owners associations, timeshare associations, fractional associations, condo-hotels, commercial associations, and other associations.
Gary Porter is the creator and coauthor of Practitioners Publishing Company (PPC) Guide to Homeowners Associations and other Common Interest Realty Associations, and Homeowners Association Tax Library. Mr. Porter served as Editor of CAI’s Ledger Quarterly from 1989 through 2004 and is the author of more than 200 articles. In addition, he has had articles published in The Practical Accountant, Common Ground and numerous CAI Chapter newsletters. He has been quoted or published in The Wall Street Journal, Money Magazine, Kiplinger’s Personal Finance, and many major newspapers.
Mr. Porter is a member of Community Associations Institute (CAI), American Resort Development Associations (ARDA), and California Association of Community Managers (CACM). Mr. Porter served as national president of CAI in 1998 – 1999.