In the complex world of finance and accounting, even a small tool can make a significant impact, as is evident in the recent introduction of an interactive device designed to assist practitioners. This tool has the potential to save considerable time by simplifying the process of determining whether the requirements of AR-C Section 70, Preparation of Financial Statements, need to be applied, especially when the accounting or bookkeeping services result in the creation of financial statements.
The innovative tool, set to revolutionize the accounting sector, comes as a boon for professionally qualified practitioners who provide accounting services to clients. It effectively assists them in deciding whether they need to adhere to the requirements of AR-C Section 70, an important provision that was born out of Statement on Standards for Accounting and Review Services (SSARS) No. 21, Statement on Standards for Accounting and Review Services: Clarification and Recodification.
SSARS No. 21, the brainchild behind the introduction of AR-C Section 70, has been in place for nearly a decade now. Despite this, the AICPA’s Accounting and Review Services Committee (ARSC) and various technical hotlines frequently encounter questions from practitioners. These professionals are often confused about the scope and applicability of AR-C Section 70, illustrating the continuing challenges they face in navigating the intricacies of accounting standards.
To address this issue, the AICPA’s Audit & Standards staff, in collaboration with the ARSC, developed the interactive tool. The primary aim of this initiative is to resolve any lingering confusion, clarify misconceptions, and provide clear and concise guidance to practitioners. The focus is to make the standards more approachable and understandable, ultimately reducing the likelihood of misunderstandings or misinterpretations.
The tool takes the form of an interactive PDF. Practitioners can go through a brief set of questions, and based on their responses, can determine whether they need to apply AR-C Section 70. The interactive nature of the tool ensures an engaging experience, allowing practitioners to actively participate in the process of understanding and applying the standard. For those who prefer a more visual approach, a separate flowchart is also available, which provides a quick and comprehensive view of the decision-making process.
Michael Westervelt, CPA, and chair of the ARSC, provided insights into how the tool functions. “The decision tree within the tool will guide practitioners to a definitive yes or no answer regarding the applicability of AR-C Section 70,” he said. He also emphasized that the level of bookkeeping or accounting work performed for the client does not influence the level of service provided. “The crucial point to remember is that this standard is not required unless the practitioner is explicitly engaged to prepare financial statements.”
This statement underscores the importance of clear communication and understanding between practitioners and their clients. It is essential for both parties to have a shared understanding of the services to be provided, and this tool can assist in facilitating that clarity.
In conclusion, this interactive tool signifies a crucial step forward in leveraging technology to simplify the accounting and finance landscape. By helping practitioners better understand and apply complex standards and professional guidelines, the tool has the potential to save a significant amount of time, boost efficiency, and improve the overall quality of service provided to clients.
As we continue to progress in this digital age, such tools will become increasingly critical. An AICPA membership also offers access to such innovative resources and tools. The association remains committed to continually advancing the accounting profession and equipping its members with the tools and knowledge necessary for success. This new tool exemplifies that commitment, playing an instrumental role in assisting AICPA members and practitioners in navigating the complexities of AR-C Section 70 and thereby enhancing their professional proficiency.