Feb 11, 2020 Show
On February 11, 2020, the American Institute of Certified Public Accountants's (AICPA) Accounting and Review Services Committee issued Statement on Standards for Accounting and Review Services (SSARS) No. 25, "Materiality in a Review of Financial Statements and Adverse Conclusions". SSARS 25 (1) contains an explicit requirement related to determining materiality, (2) allows for the expression of an adverse review conclusion when financial statements are materially and pervasively misstated, and (3) requires a statement regarding independence in the accountant’s review report. In addition, the SSARS converges AR-C Section 90, “Review of Financial Statements,” with International Standard for Review Engagements 2400 (revised), Engagements to Review Historical Financial Statements. Review the SSARS and At a glance overview on the AICPA’s website. Related news
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Correction list for hyphenationThese words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line. Select language: The AICPA Accounting and Review Services Committee (ARSC) on Tuesday issued a new Statement on Standards for Accounting and Review Services (SSARS) that amends four sections of SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification, to more closely align them with the auditing standards in AICPA Professional Standards, where appropriate, and with the international standards for review engagements. SSARS No. 25, Materiality in a Review of Financial Statements and Adverse Conclusions, makes changes to AR-C sections 60, 70, 80, and 90 of the AICPA Professional Standards. The new SSARS further converges AR-C section 90, Review of Financial Statements, with the International Standard for Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements. ARSC said in a news release that the committee believes it is important for the SSARSs literature to be as closely converged with ISRE 2400 (Revised) as possible. The convergence is designed to facilitate accountants’ ability to perform and report on engagements in accordance with both sets of standards and also reduce confusion regarding the level of assurance obtained in accordance with either set of standards. SSARS No. 25 also aligns certain SSARSs concepts, such as materiality, with generally accepted auditing standards (GAAS). “By issuing SSARS 25 it shows our commitment to update these standards to be more aligned with our auditing standards, where appropriate, and the international standards for review engagements,” AICPA Chief Auditor Bob Dohrer, CPA, CGMA, said in a news release. “While this standard may not result in any significant change in practice for CPAs that have been performing their reviews appropriately, it will decrease diversity in practice.” SSARS No. 25 takes effect for engagements performed on financial statements for periods ending on or after Dec. 15, 2021. Early implementation is permitted. Read the full text of SSARS No. 25 or view its highlights at a glance. — Jeff Drew () is a JofA senior editor. The American Institute of CPAs (AICPA) Accounting and Review Services Committee (ARSC) has issued SSARS No. 25, Materiality in a Review of Financial Statements and Adverse Conclusions. Convergence with international review standardsAs noted in an AICPA news release relating to SSARS No. 25, the AICPA issued SSARS No. 25 to converge AR-C section 90, Review of Financial Statements, with International Standard for Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements. The ARSC believes that the SSARS requirements should be as closely converged with ISRE 2400 (Revised) as possible to facilitate an accountant’s ability to perform and report on engagements in accordance with both sets of standards. Such convergence should reduce any confusion regarding the level of assurance obtained in accordance with either set of standards. Further, SSARS 25 also aligns more closely with other principles of generally accepted auditing standards (GAAS). While, as noted in the AICPA’s news release, there are significant differences between an audit engagement and an engagement performed in accordance with SSARSs, other concepts, such as materiality, are consistent regardless of the level of services performed on the financial statements. SSARS No. 25 amends SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification, specifically:
The AICPA has also issued an At-A-Glance, Revisions to Review Standard for Consistency with Other Professional Standards, to accompany SSARS 25. The At-a-Glance provides a summary and background discussion on SSARS 25 and the materiality standards. Effective dateThe amendments made by SSARS 25 are effective for engagements performed in accordance with SSARSs on financial statements for periods ending on or after December 15, 2021, with early implementation permitted. Keep Reading on CCH® Accounting Research Manager. Not a subscriber? Sign up for a Free Trial What management inquiries are required under Ssars 25?SSARS 25 adds new inquiries of management including:. Material commitments, contractual obligations, or contingencies.. Material nonmonetary transactions.. Significant changes in the business activities or operations.. Significant changes to the terms of contracts that materially affect the financial statements.. Does Ssars 25 affect compilations?SSARS 25 does not change compilation reporting requirements, except for reports on financial statements prepared using the contractual or regulatory basis of accounting.
What is the effective date of Ssars 21?SSARS No. 21 is effective for engagements on financial statements for periods ending on or after December 15, 2015 but early implementation is permitted.
Is materiality required for a review?SSARS No.
The new standard requires auditors to determine materiality for the financial statements and apply the materiality benchmarks in designing procedures and evaluating results.
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