SSARS #19 Ten Issues for the Tax Practitioner Statements on Standards for Accounting and Review Services No. 19 Things that should make you go hmmm or Things that if you don t go hmmm now will make you go oh sh**t later
Top Ten Issues for Consideration Engagement Risks Who s our client? What are we actually doing? Who s in-charge? Are we independent, and if not, what do we do? Should we be doing this work? Do I need my attorney on speed dial?
Top Ten Issues for Consideration Practice Risks (continued) Do we need a more formal system of quality control? Is peer review going to affect my practice? What kind of work do we want to be associated with? Where does the buck stop?
Engagement Risks Who s s our Client? SSARS 19 doesn t define the user But requires us to consider the user Bookkeeping work we don t always consider who might be using the financials Management Only Don t have to issue report Must have legend on all pages Can issue a report If you do, could be subject to peer review Who is management in a closely held business If you know your user is other than management you can t ignore it Should you expand your scope of work if your report is going to someone other than management?
Engagement Risks What are we actually doing? Monthly bookkeeping for the tax return? Are the financials in accordance with GAAP or something else Are we putting a GAAP report on with Section 179 or bonus depreciation Financial statements that can be used for whatever Going to a mortgage company for a mortgage loan Going to a passive owner up north (maybe an in-law or sibling) Does our risk increase the broader or less defined the purpose Who s really doing the work Who s responsible for the work Is there adequate supervision Is there adequate competency If not, are you more actively involved Is materiality a factor (yes) Have you defined it If you ve defined it, does the person doing the work know what it is and what it means Does your client
Engagement Risks Who s s In-Charge? Secretary or bookkeeper Full-charge bookkeeper or accountant CPA You re issuing a professional product that requires a CPA to perform work Can t shirk your professional responsibility Can t have your cake and eat it too Professional rates Non-professional service Bottom line is it s your license that s on the line, not your staff s job
Engagement Risks Are We Independent? What If We re Not? You may know if you re independent, but what about everybody else Do you have procedures in place to determine this on bookkeeping clients If you re not independent do you say why Can still just say that you are not independent If you say why, you have to give all of the reasons Do you know all of the reasons What about perceived independence For you For staff Once you start saying why, you better be sure There is a potentially long period of time to get your independence back May be substantially more liability if you re wrong
Engagement Risks Should We Be Doing This Work? Our professional requirements have been better defined Stick your head in the sand and hope Isn t it possible that some work may no longer be cost effective Are all tax clients good attestation clients Should you restructure your practice To embrace this work To avoid this work
Engagement Risks Do I Need My Attorney On Speed Dial? We have been given additional guidance Every time that has happened in the past it has increased our risk of being sued Our guidance is an attorney s roadmap At a minimum, we need to formalize and document in accordance with our requirements There is a reason banks still ask for compilations
Practice Risks Quality Control System Professional Standards Volume 2 QC 10 Required to have a system in place Must address: Leadership Relevant ethical requirements Acceptance and continuation of client relationships Human resources Engagement performance Monitoring
Practice Risks Other Issues Peer review What kind of professional firm are we Where does the buck really stop
Conclusion Questions Thank you Contact info: Mark Brechbill Telephone: (772) 220-3380 ext 13 Email: mbrechbill@markbrechbill.com