The AICPA on September 23, 2016, released Statement on Standards for Accounting and Review Services (SSARS) No. 22, Compilation of Pro Forma Financial Information.
The standard revises AR Section 120, “Compilation of Pro Forma Financial Information,” by putting the guidance into the AICPA’s clarified format. The AICPA’s Clarity Project has undertaken a wide-ranging review of the accounting profession’s guidance and reissued it in a format that is easier to understand and use. The AICPA said the standard will be effective for compilation reports on pro forma financial information dated on or after May 1, 2017.
The standard also replaces SSARS No. 14, Compilation of Pro Forma Financial Information.
SSARS No. 22 spells out an accountant’s obligations for reviews of pro forma information, including the management of the client relationship and the agreement for the review engagement. It also spells out the requirements for understanding the entity’s financial reporting framework, the compilation procedures, the report, and the documentation.
The standard defines pro forma financial information as an adjustment to historical results to reflect the effects of a merger, securities offering, change in a business’s capital or legal structure, or asset sale.
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