ASSEMBLY IS NOT DEAD, YET ASSEMBLY IS NOT DEAD, YET

The Accounting and Review Services Committee (ARSC) under the leadership of chair Wanda Lorenz continues to discuss the issues related to the exposure draft, "Assembly of Financial Statements for Internal Use Only," that was issued in late 1995. Although the ED seems to have expired on the vine, the committee continues to focus on the issues that the ED attempted to deal with. At its July meeting ARSC discussed some of those issues as follows:

* The applicability of Statements on Standards for Accounting and Review Services (SSARS) to engagements in which a CPA prepares financial statements and also performs significant management functions, such as hiring employees, signing checks, and investing idle cash. This may be a common situation where the CPA is, in fact, the part-time controller. It was concluded that SSARS may not be applicable and that a CPA would be precluded from issuing a compilation report. A working group was formed to address the issues encompassed by this situation. The group will report to the committee at its September meeting. AICPA staff were asked to inquire of AICPA legal counsel on the potential legal consequences and exposures when a CPA prepares financial statements and also performs significant management functions.

* The desirability of amending SSARS to redefine the phrase "submission of financial statements." Of concern is the possibility that, because of computer technology, financial statements can be produced at any time during an accounting cycle even though a closing has not taken place and information may be missing or incomplete. The CPA may be in the midst of adjusting balances and the client pushes the button and produces a financial statement.

* The desirability of revising the definition of a compilation service into three parts--assembling the financial statements, performing compilation procedures, and issuing a compilation report.

ARSC also reviewed the AICPA's peer review compilation engagement checklists to determine whether they are evaluating the performance of procedures that go beyond the SSARS standards. The committee agreed that it appeared the checklists went beyond standards because they seem to require documentation of work performed in a compilation. SSARS does not require documentation of work performed. A working group was formed to make recommendations for revision to the checklists. *