Tentative Conclusions Reached by the Board

At its February 1999 meeting, using the aforementioned criteria, and after much debate, the Board concluded that the following options should be brought to the AICPA Council members for further deliberation:

• Amend the AICPA governing rules to permit all CPAs to compile financial statements under SSARS No. 1.

• Encourage the ARSC to amend SSARS No. 1 to enable a fourth level of service to be developed that would result in financial statements that are restricted to use by internal personnel.

RATIONALE FOR TENTATIVE CONCLUSIONS

This section summarizes considerations that were deemed significant by Board members. It includes reasons for accepting certain views and rejecting others.

"CPA Firm" as a requirement to perform compilations. When SSARS No. 1 was promulgated in 1978, its purpose was to provide a third-party report in which the CPA did not provide any form of assurance. The performance of the service was subjected to higher standards (such as performance restricted to CPAs within CPA firms, and peer review) because of the potential for third party reliance. During its deliberation, the Board questioned whether that framework was still appropriate.

The Board recognized that the standards that guide the performance of compilations are focused primarily on the CPA as an individual rather than on the firm. There are standards that apply to the CPA firm, but upon analysis, the standards applicable to the individual seem more influential.

For example, Rule 201 of the AICPA Code of Professional Conduct applies to all members and requires the following in performing professional services:

1. Professional Competence. Undertake only those professional services that the member or the member’s firm can reasonably expect to be completed with professional competence.
2. Due Professional Care. Exercise due professional care in the performance of professional services.
3. Planning and Supervision. Adequately plan and supervise the performance of professional services.
4. Sufficient Relevant Data. Obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in relation to any professional services performed.

In many respects, and debatably not all, the standards of performance within SSARS No. 1 are founded in Rule 201. Rule 201 governs the actions of the individual, and all AICPA members are governed by the Code of Conduct that sets forth the requirements for integrity, objectivity, and independence.

In contrast, Rule 101, Independence, is applicable to both the member and his or her firm. Rule 101 requires that a member or his or her firm be independent. However, SSARS No. 1 allows a member or his or her firm to disclose a lack of independence and perform the compilation engagement. The firm’s lack of independence does not impact the performance of this service, only the reporting.