in connection with financial statements of a nonissuer, nonpublic client. All right and

it defines here what is considered public. All SSARS engagements are required to be performed

in accordance with the general principles under ARC 60. Under these general principles

which is the ARC 60 that I just mentioned. These are the general principles. So under

ARC-60, these are the general principles. These principles apply to all of these and

again today we're gonna talk about reviews, compilations and preparation of financial

statement engagements. In looking at these principles, there are

five basic categories that we're looking at. The five categories are the financial statements

which we'll expand on in just a moment. Ethical requirements, so ethics, professional judgment.

Judgment,D-G-M-E-N-T, conduct of the engagement in accordance with SSARS. SSARS by the ARSC

of the AICPA and engagement level quality control. All right, so these are again the

general. Now remember we're gonna talk about these, spend a few minutes on it. They apply

to all of these three services or engagements we're doing under SSARS.

All right, financial statements, now since day one what have we been saying, whose statements

are these? Managements, management is responsible for the preparation, for the content and so

on. In an audit our job's to go out and give an opinion or positive assurance. What the

financial statements management is responsible and they're gonna do these statements in accordance

with some sort of framework. We talk about either a general purpose framework which would

be doing it in accordance with GAAP or IFRS. We also have what we call a special purpose

framework and a special purpose framework would be something like what we called OCBOA,

Other Comprehensive Basis of Accounting other than GAAP. So OCBOA could be a cash basis,

a tax basis, and contractual regulatory agency basis. It's some sort of OCBOA.

What we're basically saying is the statements are management's responsibility and they're

either gonna be basically in accordance with the general purpose framework or a special

purpose framework and that's how those statements are gonna be setup. It says their managements

require until you see a couple of bullets. Identify the applicable financial reporting

framework whether it's the general purpose framework or special purpose, they have to

identify the framework. Prepare and fairly present the statements in accordance with

that framework and adequately describe the framework in the financial statements. That's

what again the general standards, the general principles are for financial statements.

Ethical requirements, now with ethics we did talk about that earlier in profession responsibilities

in an earlier section. It says the account is required to comply with all relevant ethical

requirements including those, of the AICPA code of professional conduct. That was another

area that's like 15 to 20% of the exam. That's its own section code of conduct. This entails

compliance with fundamental principles of professional ethics established by the code.

Now what do these principles include? Principles include responsibilities that says basically

responsible to use professional and moral judgment in order to maintain the public confidence

and the profession. The public interest, you want to make sure that you're serving the

public interest by keeping that in mind also acting with the next thing, integrity. Honest,

protect the client's confidentiality, not doing things for personal gain.

That's why when you're watching TV and they interview all these stock people and it says,

"Does he have a financial interest or does he not?" Because we want to know, is this

person recommending the stock just because their portfolio owns it or they really recommending

it because they think it's a good company? That's where we want to know do they or do

they not have any kind of conflict of interest. Due care acting with due professional scared,

scare with care because that scares me. Due professional care which is with due diligence,

technical and ethical standards acting competent and so forth. Scope and nature of services

of adding that performances and compliance with the code of quality control policies,

so scope and nature. Those are all what we call the ethical requirements,

ethical requirements. Those definitions that I covered, you will see in the code of professional

conduct section of the course. That's where I expanded about what are responsibilities,

public interest, integrity, objectivity, you don't have to memorize them all but you'll

see them in detail in the code of conduct. Professional judgment, professional judgment

the accountant should use knowledge and experience in performing all of these SSARS engagements.

Again, these rules apply to all of those which means whether it's preparation of financial

statement engagement, a compilation engagement, a review engagement, you need to again management's

responsibility for the statements. You've got to make sure that it is some kind of acceptable

finance reporting framework. Ethical requirements act with ethically while

you're doing the work. Professional judgment, use your knowledge and experience. Conduct

of the engagement in accordance with SSARS, basically says that you need to understand

the rules of SSARS, Statements on Standards for Accounting and Review Services whether

it's ARC 60 or 70 or 80 or 90 depending on what you're doing. Also be familiar with when

you need to add explanatory paragraphs or an emphasis of a matter or other matter paragraph

because that's dictated in SSARS.