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SSARS RECENT UPDATES AND DEVELOPMENTS

Writer's picture: KACPAKACPA
James S. Kim, CPA
James S. Kim, CPA

Backgrounds for ARSC and SSARS – 


The Accounting and Review Services Committee (ARSC) is a senior technical committee of the American Institute of Certified Public Accountants (AICPA). The mission of ARSC is to serve the public interest by developing, updating, and communicating comprehensive standards and practice guidance that enable accountants of nonissuers to provide high quality, objective SSARSs services to nonissuers in an effective and efficient manner.


The scope of the Committee's authority is limited to unaudited financial statements or other unaudited financial information of nonpublic entities. The Statements on Auditing Standards (SASs) issued by the AICPA's Auditing Standards Board (ASB) provide guidance to CPAs who perform services in connection with audited financial statements of nonissuers. PCAOB Standards provide guidance to CPAs who perform audit or review services for issuers. The FASB provides guidance to determine the content of financial statements in accordance with generally accepted accounting principles. Pronouncements of the ARSC are issued as Statements on Standards for Accounting and Review Services (SSARS).


ARSC has been designated by the AICPA Council to promulgate standards under the AICPA's Code of Professional Conduct. The pronouncements of the ARSC represent the authoritative literature for CPAs when providing accounting and review services to nonpublic entities. However, SSARS do not apply to AICPA members not in public practice.


Pronouncements of SSARS by ARSC (as of January 2024) – 


  • SSARS No. 1, Compilation and Review of Financial Statements (December 1978) (Superseded December 2010 by the issuance of SSARS No. 19).

  • SSARS No. 2 (AR 200), Reporting on Comparative Financial Statements (October 1979) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 3 (AR 300), Compilation Reports on Financial Statements Included in Certain Prescribed Forms (December 1981) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 4 (AR 400), Communications Between Predecessor and Successor Accountants (December 1981) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 5, Reporting on Compiled Financial Statements (July 1982) (Superseded November 1992 by the issuance of SSARS No. 7).

  • SSARS No. 6 (AR 600), Reporting on Personal Financial Statements Included in Written Personal Financial Plans (September 1986) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 7, Omnibus Statement on Standards for Accounting and Review Services—1992 (November 1992) (Not published as a stand-alone section).

  • SSARS No. 8, Amendment to Statement on Standards for Accounting and Review Services No. 1, Compilation and Review of Financial Statements (October 2000) (Not published as a stand-alone section).

  • SSARS No. 9, Omnibus Statement on Standards for Accounting and Review Services—2002 (November 2002) (Not published as a stand-alone section).

  • SSARS No. 10, Performance of Review Engagements (May 2004) (Not published as a stand-alone section).

  • SSARS No. 11, Standards for Accounting and Review Services (May 2004) (Superseded December 2010 by the issuance of SSARS No. 19).

  • SSARS No. 12, Omnibus Statement on Standards for Accounting and Review Services—2005 (July 2005) (Not published as a stand-alone section).

  • SSARS No. 13 (AR 110), Compilation of Specified Elements, Accounts, or Items of a Financial Statement (July 2005) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 14 (AR 120), Compilation of Pro Forma Financial Information (July 2005) (Superseded September 2016 by the issuance of SSARS No. 22).

  • SSARS No. 15, Elimination of Certain References to Statements on Auditing Standards and Incorporation of Appropriate Guidance Into Statements on Standards for Accounting and Review Services (July 2007) (Not published as a stand-alone section).

  • SSARS No. 16 (AR 20), Defining Professional Requirements in Statements on Standards for Accounting and Review Services (December 2007) (Superseded December 2010 by the issuance of SSARS No. 19).

  • SSARS No. 17, Omnibus Statement on Standards for Accounting and Review Services—2008 (February 2008) (Not published as a stand-alone section).

  • SSARS No. 18, Applicability of Statements on Standards for Accounting and Review Services (February 2009) (Not published as a stand-alone section).

  • SSARS No. 19, Compilation and Review Engagements (December 2009) (Superseded December 2015 by the issuance of SSARS No. 21).

  • SSARS No. 20, Revised Applicability of Statements on Standards for Accounting and Review Services (February 2011) (Not published as a stand-alone section).

  • SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification (October 2014).

  • SSARS No. 22, Compilation of Pro Forma Financial Information (September 2016).

  • SSARS No. 23, Omnibus Statement on Standards for Accounting and Review Services—2016 (October 2016).

  • SSARS No. 24, Omnibus Statement on Standards for Accounting and Review Services—2018 (May 2018).

  • SSARS No. 25, Materiality in a Review of Financial Statements and Adverse Conclusions (February 2020).

  • SSARS No. 26, Quality Management for an Engagement Conducted in Accordance With Statements on Standards for Accounting and Review Services (June 2022)


SSARS Nos. 1-20 were codified into AR Sections. SSARS No. 21 clarified and recodified all prior SSARS. SSARS No. 21 and all subsequent SSARS are codified into AR-C Sections.


The AICPA organizes the SSARS into the following AR-C Sections:

  • AR-C 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services

  • AR-C 70, Preparation of Financial Statements

  • AR-C 80, Compilation Engagements

  • AR-C 90, Review of Financial Statements

  • AR-C 100, Special Considerations—International Reporting Issues

  • AR-C 120, Compilation of Pro Forma Financial Information


SSARS No. 26 – 


In June 2022, the Accounting and Review Services Committee (ARSC) issued SSARS No. 26, Quality Management for an Engagement Conducted in Accordance With Statements on Standards for Accounting and Review Services. Concurrently, the AICPA issued three additional standards that, together with SSARS No. 26, collectively are referred to as the “quality management standards.” SSARS No. 26 conforms the SSARS with the other quality management standards and enhances the quality management objectives at the engagement level. Other than the revision to AR-C 90A.16, which was effective upon issuance, SSARS No. 26 is effective for SSARS engagements (preparations, compilations, and reviews of financial statements) for periods beginning on or after December 15, 2025.



New “Quality Management Standards” –


In June 2022, the AICPA issued three standards.  Those are Statement on Quality Management Standards (SQMS) No. 1, A Firm's System of Quality Management; SQMS No. 2, Engagement Quality Reviews; and Statement on Auditing Standards (SAS) No. 146, Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards.  Among other things, these standards enhance the engagement partner's responsibility for engagement leadership and clarify and strengthen requirements for a more robust engagement quality review.  Subsequently, in March 2023, the AICPA issued SQMS No. 3, Amendments to QM Sections 10, A Firm's System of Quality Management, and 20, Engagement Quality Reviews, to amend QM 10 and 20 relating to recently issued SAS No. 149, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors).


SQMS No. 1 supersedes Statement on Quality Control Standards No. 8, A Firm's System of Quality Control as amended, and implements a risk-based approach to quality management, with additional quality system components and new robust requirements. SQMS No. 2 addresses the appointment and eligibility of the engagement quality reviewer and performance of engagement quality reviews. SQMS No. 1 and SQMS No. 2 are codified as QM 10 and QM 20, respectively. SQCS No. 8 (former QC 10) is recodified as QM 10A. The quality management standards in SQMS No. 1 are required to be designed and implemented by December 15, 2025, with an evaluation of the system of quality management (SQM) to be performed within one year. SQMS No. 2 is effective for audits and reviews of financial statements for periods beginning on or after December 15, 2025, and for other engagements in a firm's accounting and auditing practice beginning on or after December 15, 2025.


SQMS No. 1 takes a new approach in addressing the firm's responsibility to design, implement, and operate a system of quality management for its accounting and auditing practice. Following are some of the most significant changes:

  • The framework of SQMS No. 1 is supported by eight interrelated QM components, whereas SQCS No. 8 is supported by six QC elements. The QC elements are also interrelated, but SQMS No. 1 stresses the relationship among the components to a greater extent.

  • A new risk-based approach to quality management that requires firms to follow a risk assessment process tailored to the firm's circumstances for designing and operating its SQM.

  • A more robust governance and leadership QM component building on the leadership responsibilities QC element.

  • The QC element of human resources is expanded to include all resources a firm needs to operate its SQM and perform engagements, including technological, intellectual, and human resources.

  • New component requirements for information and communication, including external communication when appropriate.

  • An enhanced monitoring and remediation component that broadens the focus from engagement-level monitoring to the entire SQM.

  • New requirements for firms that belong to a network and use network services.

  • A new requirement for an evaluation by those assigned ultimate responsibility and accountability for the SQM as to whether the SQM achieves the objectives required under SQMS No. 1.

SQMS No. 1 also addresses the firm's responsibility to establish policies or procedures for engagements that are subject to engagement quality reviews. In other words, SQMS No. 1 requires that the firm determine when an engagement quality review is an appropriate response to quality risks. However, the requirements for performance of engagement quality review (EQR) are now in SQMS No. 2.


SQMS No. 2 deals with the appointment and eligibility of the engagement quality reviewer, and the requirements, performance, and documentation of the engagement quality review. The requirements with regard to the appointment and eligibility of the engagement quality reviewer are more robust than under current SQCS No. 8. Following are some of the more significant changes:

  • New eligibility requirements of the individuals within the firm responsible for the appointment of engagement quality reviewers.

  • New eligibility requirements of individuals to assist the engagement quality reviewer in performing the EQR.

  • An enhanced requirement for the engagement quality reviewer's authority, competence, and capabilities, including sufficient time to perform the EQR.

  • New requirements that address the engagement quality reviewer's overall responsibility for the EQR, including its documentation.

  • A new requirement for the EQ reviewer to perform certain EQR procedures at appropriate points of the engagement.


Performance Requirements for Financial Statement Preparation Service (AR-C 70A) – 

  • Address accepting or continuing the engagement

  • Establish an understanding with the client regarding the services to be performed and document the understanding through a written communication signed by both the accountant or the accountant's firm and management or those charged with governance

  • Understand the client's applicable financial reporting framework (cash, tax, GAAP, etc.)

  • Prepare the financial statements in accordance with the applicable financial reporting framework using information provided by management, including records, documents, and explanations, with specific requirements related to financial statements prepared using a special purpose framework and financial statements that omit substantially all disclosures. In addition, a known departure or departures from the applicable financial reporting framework must be disclosed either on the face of the financial statements or in a note to the financial statements.

  • Ensure that a statement (commonly referred to as a legend) that no assurance is being provided is included on each page of the financial statements. If the financial statements do not include a legend indicating that no assurance is provided, the CPA should either perform a compilation engagement or issue a disclaimer that makes it clear that the CPA is providing no assurance.  

Examples of statements that usually would be acceptable include the following:

• No assurance is provided on these financial statements.

• These financial statements have not been subjected to an audit or review or compilation engagement, and no assurance is provided on them.

• These financial statements are unaudited, and no assurance is provided on them.

  • If the financial statements are prepared in accordance with a special purpose framework (such as cash basis or tax basis), include a description of the financial reporting framework on the face of the financial statements or in a note to the financial statements. The description is usually placed next to or under the title of the financial statements (for example, “Statement of Revenues and Expenses—Cash Basis”)

  • Ensure that management understands and accepts responsibility for any significant judgments regarding amounts or disclosures reflected in the financial statements with which the accountant has assisted management.

  • Request additional or corrected information when the accountant becomes aware that information supplied by the client is incomplete, inaccurate, or otherwise unsatisfactory

  • Disclose the omission of substantially all disclosures required by the applicable financial reporting framework (if applicable) on the face of the financial statement or in a note to the financial statements. This disclosure may be labeled “Selected Information—Substantially All Disclosures Required by [the applicable financial reporting framework] Are Not Included”

  • Prepare documentation in sufficient detail to provide a clear understanding of the work performed. At a minimum, 

    1. Engagement letter 

    2. Financial statements that the accountant has prepared.


Performance Requirements for Compilation Procedures (AR-C 80A) – 

  • Address accepting or continuing the engagement.

  • Establish an understanding with the entity regarding the services to be performed and document the understanding through a written communication with management.  Engagement letter be signed by both the accountant or the accountant's firm and management or those charged with governance.

  • Have, or obtain, an understanding of the applicable financial reporting framework and the significant accounting policies to be used in the preparation of the financial statements.

  • Read the compiled financial statements and consider whether they appear to be appropriate in form and free from obvious material misstatements.

  • Take certain actions when the accountant becomes aware that information supplied by the entity is incomplete, inaccurate, or otherwise unsatisfactory.

  • Take certain actions when the accountant becomes aware of any of the following:

  • the applicable financial reporting framework is not adequately referred to or described in the financial statements,

  • the financial statements require adjustment to comply with the applicable financial reporting framework, or

  • the financial statements are otherwise misleading.

  • Prepare documentation in sufficient detail to provide a clear understanding of the work performed. At minimum,

    1. Engagement letter

    2. Justification for a departure from a relatively mandatory requirement and how the alternative procedure performed achieved the intent of the requirement, if applicable.

    3. Financial statements.

    4. Accountant's compilation report.



Performance Requirements for Review Procedures (AR-C 90A) – 

  • Establish an understanding with the entity regarding the services to be performed and document the understanding through a written communication with management or those charged with governance.

  • Communicate with management or those charged with governance regarding significant matters that arise during the review engagement.

  • Determine materiality.

  • Have, or obtain, a level of knowledge of the accounting principles and practices of the industry in which the entity operates and a general understanding of certain matters related to the entity itself.

  • Design and perform review procedures with professional skepticism, based on the accountant's - 

  • understanding of the industry,

  • knowledge of the client, and

  • awareness of the risk of unknowingly failing to modify the review report on financial statements that are materially misstated.

  • Perform appropriate inquiry, analytical, and other procedures.

  • Read the financial statements and consider whether they conform with the applicable financial reporting framework based on the information the accountant acquires while performing the review.

  • Perform additional procedures to address specific circumstances such as related parties and related party transactions, fraud and noncompliance with laws and regulations, and going concern.

  • Obtain and read reports from other accountants who issued a report on the financial statements of significant components.

  • Determine that the financial statements reviewed reconcile to the underlying accounting records.

  • Accumulate and evaluate misstatements in the financial statements, request that management consider any unsatisfactory information obtained while performing the review procedures, perform any additional procedures necessary to obtain limited assurance that the financial statements are in accordance with the applicable financial reporting framework, and evaluate whether there is sufficient and appropriate review evidence.

  • Form a conclusion.

  • Request representations from management for all financial statements and periods covered by the accountant's review report.

  • Prepare documentation in sufficient detail to provide a clear understanding of the work performed. At minimum,

  • Engagement letter.

  • Communications with management regarding fraud or noncompliance with laws and regulations. (AR-C 90A.34)

  • Communications with management about the accountant's expectation to include an emphasis-of-matter or other-matter paragraph in the accountant's review report.

  • Communications with other accountants that have audited or reviewed the financial statements of significant components.

  • Justification for a departure from a relatively mandatory requirement and how the alternative procedure performed achieved the intent of the requirement, if applicable. (AR-C 60A.17)

  • Representation letter.

  • Financial statements.

  • Accountant's review report.

  • Communications with management, those charged with governance, and others about significant matters, including their nature, that surface during the engagement.

  • Information that is inconsistent with the accountant's findings about significant matters affecting the financial statements and how the inconsistencies were addressed.

  • Who performed the review procedures and the date the procedures were completed.

Who performed the technical review necessary to insure engagement quality control, the extent of the review, and the date the review was performed.



James S. Kim, CPA

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