United States

Proposed SSARS: Prospective and pro forma financial information


Recently the American Institute of Certified Public Accountants Accounting and Review Services Committee issued an Exposure Draft of the following proposed Statements on Standards for Accounting and Review Services (SSARS):

  • Compilation of Prospective Financial Information – If finalized, this proposed SSARS will result in the requirements and guidance for compilations of prospective financial information moving from the attestation standards to the SSARS. (Requirements and guidance with respect to examinations and engagements to apply agreed-upon procedures to prospective financial information will remain in the clarified attestation standards, which are expected to be issued soon.) The proposed SSARS will revise the applicability of the compilation services so the accountant will be required to perform the compilation engagement only when engaged to do so. The proposed SSARS does not require written representations from the responsible party in a compilation of prospective financial information.  
  • Compilation of Pro Forma Financial Information – This proposed SSARS represents the clarity redraft of, and will supersede, AR 120, Compilation of Pro Forma Financial Information, with no significant changes to the extant standard.
  • Omnibus Statement on Standards for Accounting and Review Services2016 –  Among other revisions, this proposed SSARS will amend:
    • AR-C 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services, and AR-C 70, Preparation of Financial Statements, so that the preparation of prospective financial information will be performed in accordance with SSARS. The result will be that the accountant can prepare prospective financial information without a report and such prospective financial information can be distributed to third parties. The accountant will be required to ensure that a statement is included on each page of the financial statements indicating, at a minimum, that “no assurance is provided” on the prospective financial information. If the accountant is unable to include a statement on each page of the financial statements, the accountant will be required to (a) issue a disclaimer that makes clear that no assurance is provided on the prospective financial information; (b) perform an examination, a compilation or an agreed-upon procedures engagement with respect to the prospective financial information or (c) withdraw from the engagement. Also, AR-C 70 includes a requirement that the accountant should not prepare prospective financial information that excludes (a) disclosure of the summary of significant assumptions; (b) a description of the limitations on the usefulness of the presentation or (c) an identification of the hypothetical assumptions if the prospective financial information is a financial projection.
    • AR-C 80, Compilation Engagements, to delete the preparation of pro forma and prospective financial information as examples of other financial information that may be the subject of a compilation engagement in accordance with AR-C 80. Additional revisions clarify that the accountant is required to disclose known departures from the applicable financial reporting framework in the accountant’s compilation report.

It is anticipated that the proposed SSARS will be effective no earlier than the preparation of or reports on subject matter or review reports on financial statements dated on or after May 1, 2017. The Exposure Draft is available for comment until May 6, 2016.