In late 1997, AICPA issued the 1997/98 versions of the Audit Risk Alert and the Compilation and Review Alert. The former is described as a general update on auditing and accounting matters and the latter as an update on practice developments and professional standards. In the past, both publications were issued by the AICPA's Professional Standards and Services Group. This year that group takes responsibility for the compilation and review document only while the audit document is identified as being issued under the authority of George Dietz, technical manager of accounting and auditing publications.

This change has had an impact on how the material is presented. Both documents have always contained updates on developments in the profession during the past year. In the past, much of the same material, particularly GAAP developments, were contained in both documents. This year, the same subject matters
are covered independently with a different focus in each document.

This year's audit risk alert has a new section on the economic environment. It also covers the following topics:

* Auditing estimates

* Client fraud

* The year 2000 issue

* Engagement letters--indemnification clauses

* Electronic evidence

* Auditing investments

* Making audits more valuable for the client and the firm

* Update on the Private Securities Litigation Reform Act of 1995

* Illegal acts reporting rule

* The Internet--an auditor's research tool

* Auditing and attestation Q&As from the AICPA technical hotline

* Independence Standards Board for auditors of public companies.

The section on making audits more valuable is something different and was adapted from an article that appeared in the auditing department of the November 1996 CPA Journal. It clearly is a departure from the original intent of the alerts, which was to put auditors on notice of high-risk audit areas. The compilation and review alert includes the following topics:

* Status of the assembly exposure draft and the applicability of SSARS No. 1

* Controllership issues--what is going on in practice

* Applicability of SSARS to different engagements

* Distribution of draft financial statements

* Consideration of fraud and internal control in a compilation or review engagement

* Analytical procedures in a review engagement

* Management representation letters in review engagements

* The year 2000 issue

* Reporting on an element of a financial statement

* Representation letters for the compilation of personal financial statements

* Cash and income tax basis financial statements

* Presentation of the accountant's report

* Proper accounting for distributions to owners

* The Internet--an accountant's research tool

The section on the assembly exposure draft covers developments to date, including the public hearing held in August 1997. It closes with the Accounting and Review Services Committee's decision to withdraw the proposed SSARS and its conclusion that CPAs should not be permitted to issue plain-paper financial
statements.

The controllership issues matter covers a proposed amendment of SSARS No. 1 that would preclude a CPA from compiling financial statements for a client if the CPA performed services that are equivalent to those performed by management. Care should be exercised in dealing with the draft amendment to SSARS, because it has not been subject to due process and may ultimately be modified. CPAs who find themselves in the situations described by the draft amendment may wish to
discuss the matter with their attorneys.

Overall, these good products have been improved this year by the elimination of duplicative material. Auditors and accountants who have not read them by now better get going.