22 Nov “Graphs, Departures and Legends”
Graphs, Departures and Legends
Use of Graphs
QuickBooks has several graphs that are very useful to clients. As with everything else, use professional judgment and conduct research to insure that the information is correct in your situation. In general, graphs included with financial statements should be included in the letter as supplemental information. Graphs that contain only percentages and not detail as to the exact amount of revenue or expense are generally not considered financial statements.
Documentation of Accounting Departures
Because SSARS 8 engagements to not contain any type of letter to accompany the financial statements there is not any required documentation of any departures from GAAP or identification of the basis. By virtue of being for management use only, the assumption is that those who will use the statements have all the requisite knowledge to interpret them. For this reason, the titles on the reports and inclusion of all reports (such as statement of cash flow, statement of Retained Earnings, etc) are not strictly adhered to either. The engagement letter can identify such departures, but it is not required to because management should already be aware of any accounting issues.
Lack of independence should be included in the engagement letter. Since there is not a report issued as part of the SSARS 8 financial statements, no mention is needed.
It is possible to issue SSARS 8 statements then re-issue the statements as SSARS 1 statements after complying with the SSARS 1 requirements. No mention of the previous SSARS 8 statements is needed.
SSARS 8 requires that each page of the financial statement document the restricted nature of the report. The required wording is not specific; it should be clear as interpreted by the CPA’s professional judgment.