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Thumbs Up on New SSARS Standard

Thumbs Up on New SSARS Standard

February 02, 2010

Don’t know if you’ve been following this story, but for the last few months, the AICPA has been working on a major revision to the standards for comp and review engagements. This is the biggest change to the standards since they were first written thirty years ago.

I’ve been reading the new standards over the last couple of days, and I must say that I’m impressed.

In comparing the new standard to the old AR 100, it seems to me that the new standard really modernizes the comp and review standards. Old AR 100 is so formulaic and prescriptive, a real checklist mentality.

The standard moves strongly toward accountant judgment by laying out broad objectives and a framework for how the accountant achieves those objectives. Whereas the old standard mandated certain procedures, the new standard requires the accountant to design appropriate procedures.

Granted, the new standards, like the previous ones, emphasize the use of analytical procedures and inquiries. The new standards don’t necessarily require people to do more work, but instead, they require the accountant to think about what it is they’re doing.

I’m a big fan of that.

The new standards also seem to drive a new level of rigor into the comp and review process, most notably by upping the ante on the documentation requirements. I’m a big fan of that, too.

You might have heard about changes to the standards that would have allowed accountants to perform a review engagement if their independence was impaired in certain, specified ways.

I was not a big fan of that one. Fortunately, that provision was dropped from the final standard, so now we’re left with just a real nice modernization of the comp and review standards that should improve the quality of the services in the years to come.