Pub. 3 2021 Issue 3

M A Y / J U N E 2 0 2 1 20 nebraska cpas BEWARE 12/31/21: A&A DEFERRALS ARE OVER! BY JIM MARTIN, CPA, CGMA The s igni f icant changes in account ing and repor t ing that were supposed to already be in ef fect were postponed due to the pandemic. That was the good news. The bad news is almost all changes were postponed to the same period—that is, periods ending on or after Dec. 15, 2021, or years beginning on or after Dec. 15, 2021. So, here we are, already deep into 2021 and we haven’t yet had the time to review what is coming our way in just a few short months. The purpose of this article is to brief ly review the coming changes in accounting and reporting that will impact nearly all practitioners, whether in public accounting or industry. The first set of major changes comes in the form of SSARS 25, “Materiality in a Review of Financial Statements and Adverse Conclusions,” which goes into effect for preparations, compilations, and reviews for periods ending af ter Dec. 15, 2021. You can also early adopt for a client if you want to deal with this right now. While SSARS 25 only makes minor changes to the conduct of a preparation or compilation engagement, it makes major changes to the way most of us conduct a review engagement! The most significant of those changes are as follows: 1. Establishes a definition of “limited assurance” as “a level of assurance that is less than the reasonable assurance obtained in an audit engagement but is at an acceptable level as the basis for the conclusion expressed in the accountant’s review report.” I know this creates a lot of excitement for you but, believe it or not, the term hasn’t been defined before and that creates issues if you ever find yourself in litigation relating to what exactly our job is in a review. This is a good thing for us. 2. De f i nes t he te rm “profess iona l skepticism” as “an attitude that includes a questioning mind, being alert to conditions that may indicate possible misstatement due to fraud or error, and a critical assessment of review evidence.” The standard shockingly requires that we conduct our review utilizing professional skepticism. I certainly realize that most of us already utilize professional skepticism in our reviews of client financial statements, but, as above, it has never been laid out in the review guidance as a mandate. 3. Here is where it starts to get fun. Paragraphs 19 and 20 of clarif ied Section 90 of the AR-C read like this: