SSARS 8 Overview - Accounting Software Secrets
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SSARS 8 Overview

SSARS 8 Overview



What It Is


The AICPA accounting and review services committee (ARSC) issued Statement on Standards for Accounting and Review Services (SSARS) no. 8, Amendment to Statement Standards for Accounting and Review Services No. 1, Compilation and Review of Financial Statements in October 2000.  This new statement is effective for financial statements submitted after December 31, 2000.


How It Differs from SSARS 1


Prior to that time, SSARS 1 required that if the accountant “submitted” the financial statements, compilation procedures must be followed.  The issue for many CPA QuickBooks consultants was that the intention was not to compile the financial statements.  By virtue of making entries into the software, material adjustments to the client’s accounting data had occurred; therefore, compliance with SSARS 1 was mandated.  Some CPAs worked around this by submitting “proposed” journal entries to the client for entry by the client should they so choose.  Still others incorrectly felt that as long as the “button” to print the financials was not pushed by the CPA, they could ignore SSARS 1.  SSARS 8 provides practical changes to SSARS 1 for accounting data that is not truly preparation of financial statements, as well as providing a special provision for management-use only information (i.e. not expected to be used by a third party). 


SSARS 8 provides an amendment to SSARS 1.

         The term “submitted” has been changed in SSARS 1 to state that the CPAs must prepare (either manually or through the use of a computer) and present (to the client or third party) the financial statements for SSARS 1 to apply.

         A provision now exits with SSARS 8 for a CPA to create financial statements intended solely for the use of management and not for any third parties.


“Prepare and Submit” Example


On page 47 in the January 2001 Journal of Accountancy there is a helpful chart that offers various scenarios with explanations of the reasoning used to determine if financial statements were submitted or not.  The interesting issue about this chart is the difference of opinion that its discussion provides.  There are seven scenarios, six of which most all professionals can agree.  There is one; however, that is fuel for debate.


Let’s start with the example on which most professionals agree:

“Using client information, the CPA prepares financial statements in the CPA’s office for use in preparing a corporate income tax return” and “the accountant gives the clients a copy of the financial statements along with the income tax return.”  Most professionals agree that “Yes” the financial statements have been submitted.  The reasoning provided in the article is “The financial statements are prepared by the Accountant and presented to the client.”  These actions are consistent with the change in the SSARS 8 language so issuing the financial statements, assuming they were not to be used for a third party, would comply with SSARS 8.


Where the debate occurs is with the following example:

“At the client’s office, the CPA makes material adjustments to the client’s accounting database, prints the adjusted financial statements” and “the CPA also prints a copy of the financial statements and presents them to the client.”  The answer according to the article is “no.”  The reasoning provided is “The accountant is providing bookkeeping services but is not “preparing” financial statements.  Material modifications no longer constitute a submission of financial statements.  Although the financial statements were presented to the client, the accountant did not prepare them.*” The footnote provided with the * is “In each scenario, a certain amount of professional judgment is involved.  If you believe that by making material adjustments you have, in fact, prepared financial statements (by using your knowledge, experience, and education you have gone beyond providing mere bookkeeping services) and you believe you have presented them to the client or others, you should comply with SSARS 1.


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