FOCUS on self-study CPE


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Kurt Oestriecher Symposium August 18 – 19 | Virtual Recommended CPE Credit: 8 Hours


 requirements.


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on a cost basis by the company. Under accounting principles generally accepted in the United States of America, the subsidiary should have been consolidated because it is controlled by the company. Had [XYZ Company] been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. Te effects on the consolidated financial statements of the failure to consolidate have not been determined.


When issuing an adverse conclusion, the accountant shall include a Basis for Adverse Conclusion and Adverse Conclusion paragraph as illustrated below:


Basis for Adverse Conclusion As disclosed in [Note X] to these financial statements, the company has not consolidated the financial statements of subsidiary [ABC Company] it acquired during 20X1 because it has not yet been able to ascertain the fair values of certain of the subsidiary’s material assets and liabilities at the acquisition date. Tis investment is therefore accounted for


Adverse Conclusion Based on my/our review, due to the significance of the matter described in the Basis for Adverse Conclusion paragraph, the financial statements are not in accordance with accounting principles generally accepted in the United States of America.


In addition to the introduction of the


adverse conclusion, SSARS 25 contained other modifications to the review report. A review report will still contain an introductory paragraph, management responsibilities paragraph and an accountant’s responsibility paragraph. However, the accountant’s responsibility paragraph will now disclose that the


 


  FOCUS.


accountant is required to be independent and meet all other ethical responsibilities. Te accountant is still required to sign and date the report, as well as disclose the city and state of the office that issued the report.


Summary Te report issued by an auditor or an accountant is the only opportunity for the CPA to communicate opinions or conclusions to the users of the financial statements. Te reporting requirements have, and will continue to, evolved as the profession receives feedback from stakeholders. It is incumbent on the CPA to stay abreast of changes in reporting standards in order to be in compliance and serve the public trust.


16 CPAFOCUS


July/August 2021


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