Computer-prepared statements: search for a solution

Statement on Standards for Accounting and Review Services (SSARS) Number 1 requires an accountant to comply with the performance and reporting standards of a compilation engagement whenever financial statements are submitted to a client. The computer-prepared interim financial statements of a nonpublic entity are often prepared without consideration of the accounting adjustments that may be necessary. The reason for the failure of these statements to reflect appropriate adjustments is that the time and cost involved to make the adjustment are not warranted. The American Institute of Certified Public Accountants (AICPA) accounting and review services committee (ARSC) was made aware of this practice problem. The ARSC then considered 3 alternatives: 1. staying with SSARS Number 1 standards, 2. requiring special compilation reports, or 3. requiring the use of a legend. An exposure draft (ED) issued by the ARSC specified the use of a legend as a means of dealing with the problem. However, the draft was withdrawn when the ARSC received numerous negative responses to it. The ARSC will continue to monitor practice, even though the ED has been withdrawn. The committee is also receptive to any alternative suggestions or comments that might lead to a workable solution.