SSARS vs SSAE Is Confusing. How Do You Organize It?
This topic becomes overwhelming because several engagement names sound almost identical. Organize them by what the CPA is being asked to do.
First bucket: SSARS
Think primarily about accounting and review services involving financial statements for nonissuers. Common services include preparation, compilation, and review. Each has a different level of involvement and assurance.
Preparation
The accountant assists in preparing financial statements. Think: prepare the statements. No assurance is provided.
Compilation
The accountant uses information provided by management to assist in presenting financial information in financial statement form. No assurance is provided.
Review
A financial statement review provides limited assurance. The accountant primarily uses inquiry and analytical procedures rather than performing a full audit.
Second bucket: SSAE
SSAE covers attestation engagements. Common categories include examinations, reviews of applicable subject matter, and agreed-upon procedures.
Examination and agreed-upon procedures
An examination provides a high level of assurance. In an agreed-upon procedures engagement, the practitioner performs specified procedures and reports findings rather than expressing a broad opinion over the entire subject matter.
Why “review” causes confusion
A review can appear under different standards depending on what is being reviewed. Do not memorize “review equals SSARS.” Ask what the subject matter is and what engagement is being performed.
The takeaway
Organize SSARS and SSAE by subject matter, service performed, and assurance level.
Related Summit guides
FAQ
Are preparation and compilation the same thing?
No. They are separate services even though neither provides assurance.
Does a review provide assurance?
Yes, a financial statement review provides limited assurance.
Why can review appear under different standards?
Because the applicable standards depend partly on the subject matter and engagement.