Preparation of Financial Statements

1 Preparation of Financial Statements4477AR-C Section 70 Preparation of Financial StatementsSource: SSARS No. 21; SSARS No. 23; SSARS No. for the Preparation of Financial Statements for periods end-ing on or after December 15, 2015, unless otherwise of This section applies when an accountant in public practice is engagedto prepare Financial Statements or prospective Financial information. (Ref: .A2).This section may also be applied, adapted as appropriate in the circumstances,to the Preparation of other historical Financial information. (Ref: par..A3)This section does not apply when an accountant prepares Financial statementsor prospective Financial information and is engaged to perform an audit, review, or compilation of thosefinancial Statements , solely for submission to taxing authorities, for inclusion in written personal Financial plans prepared by theaccountant, in conjunction with litigation services that involve pending or po-tential legal or regulatory proceedings, or in conjunction with business valuation services.

2 [1][As amended, effective for prospective Financial information prepared on or af-ter May 1, 2017, by SSARS No. 23.].02 The determination about whether the accountant has been engaged toprepare Financial Statements or merely assist in preparing Financial Statements (which is a bookkeeping service that is not subject to this section) is determinedbased on services the client requests the accountant to perform and requiresthe accountant to apply professional judgment. (Ref: par..A4)The Preparation engagement to prepare Financial Statements is a nonattest serviceand does not require a determination about whether the accountant is inde-pendent of the entity.

3 (Ref: par..A5).04In addition, an engagement to prepare Financial Statements does notrequire the accountant to verify the accuracy or completeness of the informationprovided by management or otherwise gather evidence to express an opinionor a conclusion on the Financial Statements or otherwise report on the financialstatements.[1][Footnote deleted by the issuance of SSARS No. 23, October 2016.] 2021, AICPAAR-C on standards for accounting and Review ServicesEffective section is effective for the Preparation of Financial Statements forperiods ending on or after December 15, 2015. Early implementation is objective of the accountant is to prepare Financial Statements pur-suant to a specified Financial reporting purposes of Statements on standards for accounting and ReviewServices (SSARSs), the following terms have the meanings attributed as fol- person(s) with executive responsibility for the con-duct of the entity's operations.

4 For some entities, management includessome or all of those charged with governance (for example, executivemembers of a governance board or an owner-manager).Those charged with person(s) or organization(s) (forexample, a corporate trustee) with responsibility for overseeing thestrategic direction of an entity and the obligations related to the ac-countability of the entity. This includes overseeing the Financial report-ing process. Those charged with governance may include managementpersonnel (for example, executive members of a governance board oran owner-manager).[As amended, effective for the Preparation of Financial Statements for periodsending on or after December 15, 2021, by SSARS No.]

5 25.]RequirementsGeneral Principles for Performing Engagements to PrepareFinancial addition to complying with this section, an accountant is requiredto comply with section 60,General Principles For Engagements Performed inAccordance With Statements on standards for accounting and Review and Continuance of Client Relationships andEngagements to Prepare Financial the accountant is not satisfied with any of the matters set out inparagraph .26 of section 60 as preconditions for accepting an engagement toprepare Financial Statements , the accountant should discuss the matter withmanagement or those charged with governance. If changes cannot be made tosatisfy the accountant about those matters, the accountant should not acceptthe proposed on Engagement accountant should agree upon the terms of the engagement withmanagement or those charged with governance, as appropriate.

6 The agreed-upon terms of the engagement should be documented in an engagement letterAR-C 2021, AICPAP reparation of Financial Statements4479or other suitable form of written agreement between the parties and shouldinclude the following: (Ref: par..A7 .A11) objective of the responsibilities of management set forth in paragraph .26bof section agreement of management that each page of the financialstatements will include a statement indicating that no assuranceis provided on the Financial Statements or the accountant will berequired to issue a disclaimer that makes clear that no assuranceis provided on the Financial Statements .

7 (Ref: par..A13) responsibilities of the limitations of the engagement to prepare Financial of the applicable Financial reporting framework forthe Preparation of Financial the Financial Statements are to contain a known depar-ture or departures from the applicable Financial reporting frame-work (including inadequate disclosure) or omit substantially alldisclosures required by the applicable Financial reporting frame-work[As amended, effective October 2016, by SSARS No. 23.].11 The engagement letter or other suitable form of written agreementshould be signed accountant or the accountant's firm or those charged with governance, as appropriate.

8 (Ref: par..A10)The Accountant s Knowledge and Understanding of the Entity sFinancial Reporting accountant should obtain an understanding of the Financial re-porting framework and the significant accounting policies intended to be usedin the Preparation of the Financial Statements . (Ref: par..A12)Preparing the Financial accountant should prepare the Financial Statements using therecords, documents, explanations, and other information provided by accountant should ensure that a statement is included on eachpage of the Financial Statements indicating, at a minimum, that "no assuranceis provided" on the Financial Statements . If the accountant is unable to includea statement on each page of the Financial Statements , the accountant should doone of the following: (Ref: par.)

9 A13) a disclaimer that makes clear that no assurance is providedon the Financial Statements . (Ref: par..A14) a compilation engagement in accordance with section 80,Compilation from the engagement and inform management of thereasons for withdrawing. (Ref: par..A15 .A16) 2021, AICPAAR-C on standards for accounting and Review Services[As amended, effective October 2016, by SSARS No. 23. As amended, effectivefor the Preparation of Financial Statements for periods ending on or after De-cember 15, 2021, by SSARS No. 25.].15 When preparing Financial Statements in accordance with a special pur-pose framework, the accountant should include a description of the financialreporting framework on the face of the Financial Statements or in a note to thefinancial Statements .

10 (Ref: par..A17).16If, during the Preparation of Financial Statements , the accountant as-sists management with significant judgments regarding amounts or disclosuresto be reflected in the Financial Statements , the accountant should discuss thosejudgments with management so management understands the significant judg-ments reflected in Financial Statements and accepts responsibility for thosejudgments. (Ref: par..A18 and .A24).17If the accountant becomes aware that the records, documents, explana-tions, or other information, including significant judgments, used in the prepa-ration of the Financial Statements are incomplete, inaccurate, or otherwise un-satisfactory, the accountant should bring that to the attention of managementand request additional or corrected information.