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I want to praise the AICPA in their recent attempt to innovate within our profession.  How do I define ‘innovation’ in terms of what they are doing?  Simply, this: they are reviewing how we have always done things as a profession and considering, due to technologies and the common behaviors of our customers, that maybe we should change our professional behavior, and thus our standards.  Kudos and I agree!

I’m speaking of the AICPA’s most recent Exposure Draft on changes to some SSARS (Statements on Standards for Accounting and Review Services) where they are considering making the preparation of financial statements an non-attest service.  Basically, they are proposing making ‘preparing financial statements’ separate from attest services like Compilations, Reviews and Audits.  Currently, every time we prepare financial statements, it is really considered a Compilation service, even though our customers may not intend us to Compile financials, may not want to pay for it, and do not actually need it.  As CPAs, our professional hands are tied when our customers need financial reporting.  We have to say, “I’m sorry, that quick financial statement you need will cost you.  I have to prepare a Compilation even though you don’t want one.”

The real issue that is driving this is what ‘submitting financial statements’ really means.  In an explanation of why this proposed change is necessary, the AICPA says,

“Under the existing compilation standard, the accountant is required to comply with the
compilation standard whenever he or she is engaged to report on compiled financial statements
or submits financial statements to a client or to third parties.  Because the preparation and
submission will now be considered  a nonattest service, the requirements for following the
compilation standard need to be changed to eliminate submission. This elimination is also
appropriate because the term submission is not clear and, in many bookkeeping arrangements, is
no longer relevant. With many bookkeeping services performed via cloud computing or other
remote platforms, it is no longer clear when a CPA submits or is just involved in the preparation.”


This is so cool!  The AICPA is saying (1) the term submission of financial statements is unclear (agreed!), (2) that the process of submitting financial statements is no longer relevant to how we do business (agreed!), and (3) they are recognizing the change in financial reporting where cloud-related products are being used to manage financial statements now.  This too is true.  So when have we submitted financial statements with clients who are using cloud accounting products?  It really comes down to “who hit the print button?”  If we “hit the print button” then we have performed a Compilation.  When the standards were written, cloud accounting was not considered.  Our clients can now have ready access to their financial statements that their CPA has helped them create, manage, review and comment on.  Are we submitting financial statements inside of a cloud accounting product?  We don’t know.  That is why I endorse and support the AICPA’s desire to move the preparation of financial statements off of the attest list, and allow us to serve our customers better by preparing their financial statements, teaching them about their financial statements and helping them understand their financial statements (without worrying about charging them for a Compilation).

But what if my client needs a Compilation, or their bank needs a Compilation?  Really, nothing has changed for the attest services – that is, you can still Compile, Review and Audit financial statements all freakin’ day long.  Compile to your heart’s content.  But with the proposed changes, you don’t have to if the customer does NOT need it.  It puts control back in the hands of the CPA.  And that is best for customers, so I love it.

Won’t CPA-prepared financial statements and non-CPA-prepared financial statements be the same?  That is really up to the CPA profession to sort out.  Can you explain your value to your customers as it is compared to a non-CPA?  If not, then you may have trouble explaining why they need a CPA in the first place.  That sounds like a personal problem to me.  You are responsible for innovating in the profession too.  You have to prove your worth and deliver on the brand of the CPA, which is as a Trusted Business Advisor.  In fact, CPAs are different from non-CPAs.  It doesn’t mean non-CPAs are bad, it just means we are different.  It’s up to us to prove the difference in the value – the AICPA is really just updating their standards to reflect how business is done today.  The rest is up to us!  To be sure, if a bank still requests a Compiled financial statement from a CPA (which they should), then you still have all the power to deliver that service.  That ability will not be taken away.  The service would only be required when the CPA is engaged to specifically perform the service (like for the bank, a licensing board or a bonding company).


Will you consider making a comment on this provision?  You can email your comments to Mike Glynn at [email protected]  Here is a statement you can copy into your email if you want:

Mike, I am a member of the innovative network of public accountants called the THRIVEal +CPA Network ( and we are collectively excited about the changes the AICPA is proposing to the SSARS standards to move the preparation of financial statements out of the Compilation standards.  As an organization, THRIVEal believes in a serious addiction to the service and benefit of our customers.  This proposed standard allows us to begin serving our customers with more intention, to help them prepare financial statements, or directly prepare the financial statement for them, or even allow them to print out the financials when needed.  If the change is accepted, we will no longer be bogged down by the fear of calling these reports Compilations, nor do we have to price our clients for the Compilation service when it is not necessary.

I am in agreement with the standards proposed by the AICPA’s Professional Ethics Executive Committee, and also agree with the SSARS change to further align with the GAO standards that financial statement preparation is not an attest function.  Preparing financial statements is a wonderful tool we need the AICPA to release into the hands of the CPAs across the country!  We will use the power with diligence, confidentiality and better service to our customers all over the country.  As a result, our customer will have a better awareness of the financial situation of their organizations.  Empowered with this new knowledge, we can finally begin the process of teaching our customers, and not just preparing financial statements for them.

I believe those that do not like this proposed change are acting out of fear for what this proposed change may do to their professional CPA firm.  Many firms make a lot of monthly revenue selling compilation services.  With these new proposed changes, it is becoming clear that a Compilation is often not necessary for service to the customer.  The preparation and delivery of these Compiled reports are often not understood by our small business customers, and therefore make our service to them confusing and opaque.  Our small business customers need clarity, and this proposed change gives us the needed license to provide better service.  In fact, if we are not pricing our services for preparing Compilations, we can begin pricing our services for teaching and education, a much more valuable service!

I am excited about this change!  I believe in it, need it and want it!  Please let me know how I can help you further.  Thanks again to the AICPA for this new proposed innovation!

Yours truly,


Let’s get the word out.  Let’s change our profession together!

CPA firm, Innovation
  • On 09-10-2012 at 10:43 am, Jonathan Godwin said:

    I just sent this off. Jason, thank you for making us aware that these changes are afoot (I am actually in the process of completing a self-study CPE on Comp and Review updates) and for setting up this response. What a great thing if this change actually goes through! You rock.

  • On 09-10-2012 at 10:45 am, Scott Kregel said:

    I was excited to learn of this proposal and feel like this helps to serve us, the AICPA customers, by allowing us to:

    [1] make a professional judgment as to when an attest service is being entered into
    [2] communicate customer financial information in a format that is reliable and common (yes, I am a believer that P&L’s and balance sheets and statements of cash flow are excellent financial tools that every business can learn a lot from… while key performance indicators are great, KPI’s alone can skew an owner’s perspective)
    [3] expand our services with customers by giving opportunity to redirect their budgeted dollars toward higher value services where we can help them improve their business financials and lives

    One more thought, please move to enact this change now… we do not need an effective date for the proposed regulations to be for “periods ending on or after 12-15-2016”. Let’s get it done now! We know right now that this is right and serves us and our business customers better.

  • Jason Blumer

    On 09-10-2012 at 11:11 am, thriveal said:

    Thanks guys!

  • On 09-10-2012 at 11:18 am, Brenda Richter, CPA said:

    I agree with the idea that when we help our customers with the prepration of financial reports for internal use that it should not be considered a compilation/attestation service. (customer does all the bookkeeping & we fix all of their mistakes) I’ve listened to debates on this issue for years. The more lenient say that if you’re doing bookkeeping then you’re not doing a compliation. Meanwhile, at the opposite end of the spectrum saying that if youeven look at a customer’s QB then you’re on the hook for a compilation.

    In California this has been an issue for quite sometime because if you do compilations, then you have to have a peer review.

    I have never done write-up because it’s just bookkeeping in disguise (Greg might say drag just to be funny), and a really good full charge bookkeeper can do the same thing. So, I have always tried to carefully word my engagement letters when I do clean up or financial analysis. Also, I always put the responsibility of entering adjusting journal entries on the customer. Feels quite lame to do that.

    I only have one problem with your arguments. Do you really think it changes the value in the mind of the customer whether the reports you’ve been giving them for several years with a complilation report slapped on top suddenly don’t have the report. The customer was told the report was there to meet some professional standards & said “whatever”. He proceeded to turn the page and look at the financial reports and the CPA and customers discussed them. With or without the report, the value came from the discussion – So, why do we start charging less?

  • On 09-10-2012 at 11:35 am, Kevin McCoy said:

    Done. I love what this change will mean for our clients. I have a personal example of how this silly rule causes confusion. Every month I wonder if the financial statements I print for my homeowners’ association could be considered a compilation…ridiculous!

  • On 09-10-2012 at 11:42 am, Barrett said:

    Done, homey.

  • On 09-10-2012 at 11:57 am, Leisa Stanberry said:

    Tip from the EDGE conference…personalize the letter just a bit! 🙂

  • On 09-10-2012 at 11:59 am, Brenda Richter, CPA said:

    Email sent to Mike.

  • Jennifer Blumer

    On 09-10-2012 at 1:23 pm, Jennifer said:

    Done! Thanks Jason!

  • On 09-10-2012 at 3:51 pm, Joel Ungar said:

    Interesting post Jason. I might even send the email.

    That being said, I’m trying to be optimistic that the AICPA will get something right. These are after all the same people that 15 years or so ago came out with all of these new service area that we should be doing, including Webtrust, that never went anywhere. They are the people who came up with “Feed the Pig” for a financial literacy campaign. And then there is my personal favorite – the tagline “CPA – Never Underestimate the Value” – with two negative words prominently positioned in it.

    Ok I’m done with my rant.

  • On 09-10-2012 at 5:05 pm, Greg Kyte said:

    I cc’d you on my email to Big Mike. I slightly modified your template to make it sound more like me. You’re welcome.

  • On 09-10-2012 at 11:46 pm, Patti Scharf said:


    This has been one of my hot buttons for years. I’m so happy to forward on the letter to Mike.

  • On 09-11-2012 at 1:25 pm, James Mendez, CPA said:

    Hi Jason,

    This would be a welcome change. I started my business before becoming a CPA only to find out that since it is a “fictitious” name, it cannot be a registered CPA firm and that since I am now a CPA I cannot do that kind of work through my original company. So, I now have to bill several of my clients from two different companies. This would be a big breakthrough for us.
    Thanks for coming up with the wording. I sent today.


  • Jason Blumer

    On 09-11-2012 at 8:23 pm, thriveal said:

    Thanks for the comments everyone.

    @Brenda, I agree with you – I wonder if what we’ve been doing all these years has even been valuable if we suddenly take the letter off? That is precisely why we will not prepare compilations for customers unless directed to by a bank.


  • On 09-18-2012 at 9:53 pm, Meredith Smith said:



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