AICPA issues interpretation of SSARS No. 1

The AICPA's Accounting and Review Services Committee recently issued an interpretation of the applicability of SSARS No. 1 when performing controllership or other management services. The answer follows.

If the accountant is in the practice of public accounting as defined by the AICPA’s Code of Conduct (ET section 92.23) and is not a stockholder, partner, director, officer or employee of the entity, the accountant is required to follow the performance and communication requirements of SSARS No. 1, including any requirement to disclose a lack of independence.*

If the accountant is in the practice of public accounting and is also a stockholder, partner, director, officer or employee of the entity, the accountant may either (1) comply with the requirements of SSARS No. 1, or (2) communicate, preferably in writing, the accountant’s relationship to the entity (for example, stockholder, partner, director, officer or employee).**

The following is an example of the type of communication that may be used by the accountant. "The accompanying balance sheet of Company X as of Dec. 31, 20XX, and the related statements of income and cash flows for the year then ended have been prepared by [name of accountant], CPA. I have prepared such financial statements in my capacity [describe capacity, for example, as a director] of Company X."

If an accountant is not in the practice of public accounting, the issuance of a report under SSARS would be inappropriate. However, the above communication may be used.

* If the compilation is not intended for third-party use, SSARS No. 1 as amended by SSARS No. 8 may be appropriate.

** The accountant should refer to Ruling No. 10, "Submission of Financial Statement by a Member in Public Practice," of ET section 291, Ethics Rulings on General and Technical Standards (AICPA, Professional Standards, Vol. 2, ET sec. 291.019-.020) for additional guidance.

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