I would consider this to be a "Prepared Financial Statement", as defined below
This certainly covers any independent issues!
Let me know your thoughts.
AR-C Section 70, Preparation of Financial Statements
The new section applies when a CPA is engaged to prepare financial statements, but not engaged to perform an audit, review, or compilation. Like the compilation, the preparation of financial statements is a nonassurance service, it requires an engagement letter, can omit notes, and can be used outside of management. Unlike the compilation, however, there is no disclosure requirement regarding the CPA's independence, and the financial statements do not have to be accompanied by a report.
In terms of disclosures, the preparation engagement only requires a legend on each page stating that no assurance is provided. The name of the CPA firm is not required. If the financial statements were prepared according to a special-purpose financial reporting framework (such as modified cash basis), a description of the framework should be added on the face of the financial statements or as a note. If the CPA is aware of a departure from GAAP or other chosen financial reporting framework, a disclosure should be added on the face of the financial statements or as a note. If the departure was intended to mislead users, the CPA should not prepare the financial statements.
It is important to note that AR-C Section 70 does not apply if the CPA is only engaged as a consultant to merely assist in preparing the financial statements or if the CPA prepares the financial statements as a by-product of another engagement, such as preparing tax returns or a personal financial plan. In addition, it does not apply when the CPA is an employee of the company.
Regarding whether or not the preparation engagement is subject to peer review, the AICPA clarified in early 2015 that it is subject to peer review if the CPA firm is already subject to peer review because of other engagements (compilation, review, or audit) or if the CPA firm elects to enroll. The preparation engagement is not subject to peer review if the firm only performs preparation engagements. The Pennsylvania CPA Statute only requires peer review if a firm perform audits, examinations, or reviews. So, firms that only prepare financial statements using the preparation standard will not be required to enroll and undergo peer review for Pennsylvania licensing purposes. If firms have any questions or are unsure, or are accounting practices outside Pennsylvania, they should consult their state board of accountancy to determine if enrollment in peer review is required.
The impact of SSARS 21 â and AR-C Section 70, in particular â is twofold. First, it creates a level of service that is better adapted to today's business environment and needs. Second, it makes CPA firms more competitive in the outsourcing market.
Better Fit for Today's Business Environment
AR-C Section 70 brings a level of service that was not codified until now. With these CPA-prepared financial statements, the standards are more in line with the needs of users who do not require a report, particularly among privately held companies.