Preparation of Financial Statements

Posted on: March 30, 2015

A public practice accountant is required to follow certain accounting standards when asked to prepare financial statements for a company.  Prior to the issuance of SSARS 21, Statements on Standards for Accounting and Review Services, an accountant was required to have performed an audit, review, or compilation when preparing financial statements for a company.  In order for an accountant to perform an audit or a review, the accountant must be independent of the company.  If the accountant is not independent of the company, a compilation can be performed if the lack of independence is disclosed in the report.  Now, Section 70, Preparation of Financial Statements, of SSARS 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification allows a public practice accountant to prepare your company’s financial statement without having to perform an audit, review, or a compilation on the statements. Consideration of the accountant’s independence is not a requirement and these financials statements can be distributed to third parties. However, the financials would include a statement that no assurance is being provided by the accountant.

This SSARS is effective for periods ending on or after December 15, 2015 but can be early implemented.  Please give Crace Galvis McGrath a call if you would like to discuss preparation of your company’s financial statements.