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State Board Report

September 2012

Following weeks of discussion by the Regulatory Response Committee and the Ethics and Professional Issues Committee, then vetting by the Regional Directors, on September 6 NASBA Chair Mark P. Harris and President Ken L. Bishop sent a letter in response to exposure drafts released by the AICPA’s Professional Ethics Executive Committee and Accounting and Review Services Committee on June 29. The letter suggested that both ARSC and PEEC have their new standards become operational on the same day, but took a firm stand on the need for requiring CPAs to add reports to unaudited financial statements: “We strongly recommend that Paragraph 4 be changed to require that the accountant attach a report to the unaudited financial statements and that the report’s wording include the following: “‘We (a) have prepared [assisted in the preparation of] the financial statements of [Entity’s Name]. The financial statements as of and for the year ended December31, 20XX, were not compiled, reviewed, or audited and, accordingly, we (I) do not express an opinion or any form of assurance on them.'” The NASBA comment letter also recommends that the legend “See Accountant’s Report” be placed on each page of the unaudited financial statements.

The letter further points out: “One consequence that may occur as a result of designating ‘prepare and present’ engagements as non-attest engagements is that such engagements will no longer be subject to peer review.”

NASBA’s letter can be found here. Both exposure drafts can be found on, the ARSC exposure draft entitled: “Association with Unaudited Financial Statements; Compilation of Financial Statements; and Compilation of Financial Statements-Special Considerations” and the PEEC proposal “Proposed Revised Interpretation No. 101-3 Under Rule 101.”

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