Restorative Benefits and Equity-Based Performance Plans for "Carve-Out" Retirement Plans Can Help Those Whose Benefits May Otherwise Be Limited by IRS Requirements That Benefits Be Nondiscriminatory
EXECUTIVE SUMMARY * Recently proposed revisions to professional standards would require CPAs who prepare financial statements for clients to consider that service a nonattest bookkeeping service. The CPAs would no longer be required to perform a compilation service with respect to those financial statements unless specifically engaged to do so. The proposed changes would consider all financial statement preparation to be a nonattest service, regardless of whether the accountant also is engaged to compile, review, or audit the financial statements. * CPAs who prepare financial statements would perform a compilation only if they are engaged by their client to do so in accordance with the proposed standard. The compilation would be a "read and report" service separate from the preparation of the financial statements. Once engaged to perform a compilation service, the CPA would read the financial statements to see if there are obvious mistakes or flaws, and then issue an accountant's compilation report on the financial statements. * The changes proposed would harmonize the professional standards with the views of some practitioners who already consider the financial statement preparation to be a nonattest service, and would conform the standards to corresponding U.S. Government Accountability Office (GAO) literature. * Proposed changes include a standard addressing the accountant's association with financial statements that he or she has not compiled, reviewed, or audited. The proposal would require CPAs who prepare financial statements, but are not engaged to perform a compilation, review, or audit engagement, to request that management include a label or notation that makes clear that the financial statements were not audited, reviewed, or compiled. Alternatively, CPAs can attach a disclaimer to the financial statements to indicate when they have not compiled, reviewed, or audited the financial statements. * The proposed changes are expected to have minimal impact on CPAs who prepare financial statements for their clients, except with regard to the requirement to perform a compilation service, which would be revised significantly under the proposal. ********** [ILLUSTRATION OMITTED] In accordance with recently proposed revisions to professional standards, CPAs who prepare financial statements for clients would consider that a nonattest bookkeeping service and would no longer be required to perform a compilation service with respect to those financial statements unless engaged to do so. The changes, proposed in June by two AICPA committees, would require CPAs who prepare financial statements, but are not engaged to perform a compilation, review, or audit, to request that management include a label or notation that makes clear that the financial statements were not compiled, reviewed, or audited. Alternatively, CPAs can attach a disclaimer to the financial statements to indicate when they have not been compiled, reviewed, or audited. It is anticipated that the proposed changes would have minimal impact on CPAs who prepare financial statements for their clients, except with regard to the requirements to perform a compilation service, which will undergo significant revision under the proposal. In accordance with current rules, a CPA who prepares and presents financial statements to a client or third party must also perform the compilation service, whether or not the client has engaged the CPA for the compilation. The proposed standard would dictate that CPAs who prepare financial statements would perform a compilation only if they are engaged by their client to do so. The compilation would be a "read and report" service separate from the preparation. Once engaged to perform a compilation service, the CPA would read the financial statements to see if there are obvious mistakes or flaws, and then issue an accountant's compilation report on the financial statements. …