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This is an exposure draft of a Statement on Auditing Standards on public reporting on limited reviews of interim financial information. The exposure period is unavoidably short so that the Committee can furnish guidance to CPAs who may be asked to report on limited reviews early in 1976. We recognize that this is traditionally a very busy time for CPAs but seek to assure that this exposure draft nevertheless will receive appropriate attention. In developing this exposure draft the Auditing Standards Executive Committee considered the provisions of the SEC's Accounting Series Release (ASR) No. 177, which permits a registrant to disclose in quarterly financial filings whether a limited review of interim data was performed by a CPA. A registrant that makes the disclosure must also state whether adjustments and disclosures proposed by the CPA as a result of the limited review were reflected in the related financial information. Most of the members of the Executive Committee believe that clients making these representations to the SEC cannot be prohibited from making the same representations in reports to stockholders. Further, clients that are not registrants may choose to have certain data subjected to a limited review on a timely basis. Consequently, it is likely that some companies will include representations concerning limited reviews of financial information in quarterly stockholders' reports beginning with the first calendar quarter of 1976. With that background, the key decision reflected in this draft is that the public is better served if a CPA's report is included with the data subjected to a limited review than if a client makes a representation about the results of a CPA's review. That decision will result in a significant change from current practice concerning reports on unaudited financial information. The draft provides for a form of report that includes an expression of limited assurance based on the performance of specified procedures established in Statement on Auditing Standards No. 10, "Limited Review of Interim Financial Information." This report is based on the concept that users will be able to distinguish among various types of assurance providing the limits of the assurance are disclosed in the CPA's report and the underlying procedures meet professional standards.
Financial statements, Interim -- Standards -- United States
Accounting | Taxation
American Institute of Certified Public Accountants. Auditing Standards Executive Committee, "Proposed statement on auditing standards : Public reporting on a limited review of interim financial information;Public reporting on a limited review of interim financial information" (1976). Statements of Position. 358.