AUD, Auditing and Attestation

Sources for Accounting and Review Service Engagements

Last reviewed 2026-09-14

The standards and authorities behind PocketCPA's AUD lessons on Accounting and Review Service Engagements. The topic rests on AR-C 90.

About this topic

Not every set of financial statements gets audited. A private company often hires an accountant to do something smaller, and this topic covers the three smaller things and what each one is worth.

A fourth AR-C section, AR-C 60, sits above the other three and carries the requirements common to every SSARS engagement. That is why it produces questions that look like they belong to none of them.

Key points

• A compilation provides no assurance; the accountant assists in presenting financial information without verification.
• A review provides limited assurance through inquiry and analytical procedures but does not include tests of details.
• A review report states the accountant is not aware of any material modifications that should be made.
• Independence is required for a review but not for a compilation, though a lack of independence must be disclosed.

What the lessons cover

1. Preparation (AR-C 70)
2. Compilation (AR-C 80)
3. Review (AR-C 90)
4. Preconditions and the engagement letter (AR-C 60)
5. Where SSARS stops: the boundary with the attestation and auditing standards
6. SSARS review versus a PCAOB interim review (AS 4105)

Authoritative references

Where these requirements sit in the literature. Each entry names the standard, then states what its paragraphs require.

• AR-C 70.14 covers the preparation engagement, in which no accountant's report is issued. It requires a statement on each page of the financial statements saying, at a minimum, that no assurance is provided on them. Where the accountant cannot include that statement, two fallbacks are open:
  • issue a disclaimer making clear that no assurance is provided; or
  • step up to a higher-level engagement.
• AR-C 70.01 is the scope paragraph for preparation engagements. It reaches the accountant who is engaged to prepare financial statements and is not engaged to audit, review, or compile them. Two situations fall outside it:
  • Engaged both to prepare and to compile the same statements. The preparation guidance does not apply, and the compilation engagement under AR-C 80 governs.
  • Statements prepared in conjunction with litigation services or other consulting services. These fall outside the section altogether.
• AR-C 60 is the general SSARS section, applying to preparation, compilation, and review alike. It carries three requirements:
  • A written agreement. The terms of the engagement are agreed and documented in an engagement letter or other suitable written agreement, signed by both the accountant or the accountant's firm and management or those charged with governance.
  • An acceptable framework. The financial reporting framework selected by management must be acceptable, and that is a precondition of acceptance.
  • Management's responsibilities. Management's agreement about them is the second precondition of acceptance.
• AR-C 80.17 carries the compilation report content: a statement that the accountant did not audit or review the financial statements and does not express an opinion, a conclusion, or any assurance on them. The report has none of three things:
  • a required title;
  • a limited-assurance statement; and
  • an "Accountant's Responsibility" section.
• AR-C 80 separately governs an accountant who is not independent, in three parts:
  • the report must disclose the lack of independence;
  • a description of the reasons is permitted but not required; and
  • where any reason is described, all of them must be described.
• AR-C 90.39 carries the review report, and three of its features decide questions:
  • The title includes the word "Independent", because independence is required for the engagement.
  • The conclusion takes the negative form: the accountant is not aware of any material modifications that should be made for the financial statements to conform with the applicable financial reporting framework.
  • Signature, report date, and identification of the financial statements are common to the review and compilation reports and therefore discriminate between neither.
• AS 4105.05 carries the applicability of a PCAOB interim review. It reaches the interim financial information of two kinds of entity, and in each case only if the entity's latest annual financial statements have been or are being audited:
  • an SEC registrant; and
  • a non-registrant filing with a regulatory agency in preparation for a public offering or listing.
• AS 4105.07 carries the objective, which is a basis for communicating whether the accountant is aware of any material modifications needed for conformity with generally accepted accounting principles. Three things follow from that objective:
  • it differs significantly from an audit's objective, and it provides no basis for expressing an opinion;
  • the review consists principally of analytical procedures and inquiries; and
  • it expressly does not reach tests of accounting records through inspection, observation, or confirmation, tests of controls, or corroborating evidence in response to inquiries.
• AS 4105.24 and .28 carry written representations. Under .24 they are obtained for all interim financial information presented and all periods covered. Under .28 the review is incomplete, and an incomplete review is not an adequate basis for issuing a review report, in either of two cases:
  • the accountant cannot perform the necessary procedures; or
  • the client does not provide the representations the accountant believes necessary.
• AS 4105.37 through .37D fix the report form, in four parts.
  • The title "Report of Independent Registered Public Accounting Firm."
  • A first section titled "Results of Review of Interim Financial Information."
  • A second section titled "Basis for Review Results," stating that the review is substantially less in scope than an audit and that no opinion is expressed.
  • Each page of the interim financial information clearly marked as unaudited.
• AS 4105.41 through .45 govern modification, and they sort three matters:
  • A departure from generally accepted accounting principles. Modify the report, and inadequate disclosure is such a departure.
  • Substantial doubt about going concern, and a lack of consistency. Neither requires an added paragraph where the interim information appropriately discloses the matter.
  • An explanatory paragraph. It is permitted, with an appropriate title.

How PocketCPA uses these sources

Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.

See also

• Sources for every AUD topic
• Free AUD sample questions
• The CPA exam glossary