CHAPTER OUTLINE. Volume 1. Volume 2

Transcription

1 02/16 CHAPTER OUTLINE Volume 1 Chapter Topic 1 Introduction, Background and Administration 2 Review Procedures 3 Review Engagement Report 4 Illustrative Review Working Papers 5 Form and Presentation of Financial Statements 6 Cash Flow Statements 7 Unincorporated Entities 8 Interim Financial Reporting 9 Related Party Transactions and Economic Dependence 10 Subsequent Events 11 Contingencies Volume 2 12 Contractual Obligations Commitments 13 Accounting for Interests in Joint Arrangements 14 Compilation Procedures Notice to Reader 15 Compilation of Forecasts and Projections 16 Personal Financial Statements 17 Illustrative Compilation Working Papers Appendix A B C D E Correspondence/Letters (CL) Review Engagement Forms (REF) Review Engagement Checklists (REC) Compilation Engagement Checklists & Form (CEC) Financial Statement Disclosure Checklists (DL) Index vii

2 12/15 TOC 1-1 CHAPTER 1 INTRODUCTION, BACKGROUND AND ADMINISTRATION 100 OUTLINE AND PURPOSE OF GUIDE Practitioner PROFESSIONAL STANDARDS CPA Canada Handbook CPA Canada Auditing and Assurance Standards Board Assurance Standards CPA Canada Handbook Assurance Authority of Auditing and Assurance Standards Guidelines Other Publications (CPA Canada) Auditing and Assurance Bulletins and Risk Alert Practice Advice The Buzz Articles in CA magazine International Standards ACCOUNTING AND FINANCIAL REPORTING STANDARDS Generally Accepted Accounting Principles (GAAP) What Type of Issues Does GAAP Address? Basic Concepts Definition What Are Primary Sources of GAAP? What Are Other Sources of GAAP? Statement Presentation Reviewed Financial Statements Bases of Accounting Other than GAAP Compilation Engagements ASSOCIATION INDEPENDENCE Review Engagements Compilations Framework of Standard Threats to the Practitioner s Independence Safeguards Examples of Threats and Safeguards Overview of Prohibitions

3 TOC /15 CHAPTER 1 INTRODUCTION, BACKGROUND AND ADMINISTRATION (continued).27 Policies on Independence for the Practitioner Written Statement Consultations Compilations Would a Compilation Suffice for a Particular Client? UNAUDITED FINANCIAL STATEMENTS (REVIEWS AND COMPILATIONS) Why Unaudited Financial Statements? Comparison of Audit, Review and Compilation DETERMINING THE CLIENT S NEEDS Who Will Use the Financial Statements? Review (or Audit) of Consolidated Financial Statements Compilation of Individual Statements Dealing with the Needs of Banks and Other Creditors ACCEPTING A NEW CLIENT Prospective Client s Reputation Sources of Information Assessment of Required Services Technical Expertise and Available Resources Independence COMMUNICATION WITH PREDECESSOR ACCOUNTANT Agreement With Successor in Writing GENERAL FIRM PROCEDURES Firm Policies, Appendix B (REF-1) New Client Acceptance Form, Appendix B (REF-2) Knowledge of Business Form, Appendix B (REF-4) Financial Statement Disclosure Checklist, Appendix E (DC-1) Technical Review Checklist, Appendix C (REC-6) Engagement Partner s Checklist Reviewed or Compiled Financial Statements, Appendix C (REC-7) Pre-Release Review Form, Appendix B (REF-12)

4 12/15 TOC 1-3 CHAPTER 1 INTRODUCTION, BACKGROUND AND ADMINISTRATION (continued).10 Routing Instructions for Processing Financial Statements, Appendix B (REF-13) PRIVACY LAWS Introduction Why Is the Practitioner Concerned with Privacy Laws? What is Personal Information? Principles for the Protection of Private Information Costs of Compliance Individuals Consent for Collection, Use, and Disclosure of Personal Information Effect on Practitioner Assurance Engagements Possible Scope Limitation in Assurance (Review) Engagements Non-Assurance Engagements Privacy Plan for Practitioners Reading List for Practitioners QUALITY CONTROL Practice Inspection Deficiencies Found in Quality Control Procedures Review Engagements Compilation Engagements Continuing Professional Development APPROVAL OF FINANCIAL STATEMENTS CLIENT BILLINGS PROFESSIONAL LIABILITY INSURANCE LEGAL EXPOSURE IN REVIEW AND COMPILATION ENGAGEMENTS The Facts Defensive Measures Quality Control Professional Liability Insurance Risk Avoidance and Damage Control

5 TOC /15 CHAPTER 1 INTRODUCTION, BACKGROUND AND ADMINISTRATION (continued).06 Risk Avoidance Damage Control Engagement Letters OTHER SERVICES Accounting (Bookkeeping), such as Computer-Produced Records Computerized Financial Statements Assisting Clients to Prepare Financial Statements Typing and Reproduction Services Processing Financial Data for Clients of Other Accounting Firms Preparing Government Forms Income Tax Returns CONSULTATION ON TECHNICAL AND ETHICAL ISSUES When and How to Document Consultation Consultation Documentation Form In-firm Consultation Versus Outside-firm Consultation In-firm Consultation Outside-firm Consultation Provincial Institutes/Ordre of Chartered Accountants CURRENT DEVELOPMENTS Review Engagement Project Compilation Engagements Association

6 12/15 TOC 1-5 CHAPTER 1 INTRODUCTION, BACKGROUND AND ADMINISTRATION Appendix Description Page No. 1A Rules of Professional Conduct B Association C Comparison of Audit, Review and Compilation Engagements D List of Topics Discussed in Auditing and Assurance Publications [Next page is 1-1]

7 12/15 TOC 2-1 CHAPTER 2 REVIEW PROCEDURES 200 INTRODUCTION Not-for-Profit Organizations Accounting Principles and Financial Statements STANDARDS Plausibility General Standards Business and Professional Considerations Withdrawal from an Engagement PLANNING ENGAGEMENT LETTERS Why Engagement Letters? Overcoming Client Resistance Timing of Engagement Letters Updating Engagement Letters Additional Engagement Letter Provisions for Limiting a Firm s Liability Requiring the Client to Indemnify the Firm for Any Third-Party Suits Release from Claims Because of Management Representations Specifying a Time Limitation CHANGE IN TYPE OF ENGAGEMENT Increase in Level of Service Comparative Financial Statements Decrease in Level of Service from Audit to Review Documentation KNOWLEDGE OF THE BUSINESS What Level of Knowledge Is Necessary? How to Acquire Knowledge of the Business Industry Client PERFORMANCE OF A REVIEW Professional Judgment Regarding Extent of Procedures Procedures Not Normally Required

8 TOC /15 CHAPTER 2 REVIEW PROCEDURES (continued) 235 MATERIALITY AND RISK Materiality Quantitative Materiality Qualitative Materiality Possible Management Abuse of Materiality Risk INQUIRIES What is Required? Illustrative Inquiries ANALYTICAL PROCEDURES Purpose of Analytical Procedures What are Analytical Procedures? Selecting Appropriate Analytical Procedures Examples of Analytical Procedures Trend Analysis Reasonableness or Overall Tests Ratio Analysis Developing an Analytical Ratio History Evaluating the Results of Analytical Procedures When the Results of Procedures Are Unfavourable Dealing with Differences or Deviations Deciding when a difference should be investigated Considering the significance of a difference Investigating significant differences Limitations of Analytical Procedures Analytical Procedures on Initial Engagements DISCUSSION ADDITIONAL OR MORE EXTENSIVE PROCEDURES OVERVIEW OF FINANCIAL STATEMENTS Consider ASPE General Overall View WORKING PAPER DOCUMENTATION Standards

9 12/15 TOC 2-3 CHAPTER 2 REVIEW PROCEDURES (continued).05 Working Paper Contents Documenting the Use of Analytical Procedures Conclusion REPRESENTATION LETTERS Illustrative Representation Letter OBTAINING REPORTS FROM OTHER ACCOUNTANTS COMMUNICATIONS WITH THOSE HAVING RESPONSIBILITY FOR FINANCIAL REPORTING FINANCIAL INFORMATION OTHER THAN FINANCIAL STATEMENTS CPA Canada COMPLIANCE WITH AGREEMENTS AND REGULATIONS CPA Canada REVIEW ENGAGEMENT CHECKLISTS AND FORMS Planning Notes to Engagement Form (and Time and Budget Summary) (Appendix B, REF-3) Knowledge of Business Form (Appendix B, REF-4) Review Engagement Checklists (Appendix C, REC-1 and REC-2) Analytical Procedures Worksheet (Appendix B, REF-8) Materiality Guideline Worksheet (Appendix B, REF-5) Schedule of Unadjusted Differences (Appendix B, REF-6) Year End File (Working Papers) (Appendix B, REF-7) STREAMLING ENGAGEMENT TO BECOME MORE EFFECTIVE AND EFFICIENT OTHER REVIEW TOPICS Going Concern Matters Bank Confirmations Environmental Matters Legislation Accounting Estimates Responsibility for Fraud

10 TOC /15 CHAPTER 2 REVIEW PROCEDURES (continued) Appendix 2B Additional Client Representations C Comments on Documentation F Examples of Review Procedures G Examples of Follow-up Inquiries to the Review Engagement Checklist Questions in Appendix C (REC-1)

11 12/15 TOC 3-1 CHAPTER 3 REVIEW ENGAGEMENT REPORTS 300 INTRODUCTION STANDARDS Transition to Accounting Standards for Private Enterprises DATE OF REVIEW ENGAGEMENT REPORT ADDRESSEE OF REVIEW ENGAGEMENT REPORT NEGATIVE ASSURANCE RESERVATIONS Qualified Report Departure from Appropriate Criteria (GAAP) Adverse Report Changes in Accounting Principles Qualified Report Inability to Complete Review Denial of Assurance Application of Review Engagement Report to the Notes to the Financial Statements BASIS OF ACCOUNTING OTHER THAN GAAP Acceptable Circumstances for Basis of Accounting Other than GAAP Reporting Framework Scope Reservations Basis of Accounting Reservations Examples GAAP Reservation REVIEWS OF FINANCIAL INFORMATION OTHER THAN FINANCIAL STATEMENTS Assurance Section Reporting REVIEWS OF COMPLIANCE WITH AGREEMENTS AND REGULATIONS Assurance Section Reporting OTHER CHANGES TO THE REPORT Comparative Financial Statements

12 TOC /15 CHAPTER 3 REVIEW ENGAGEMENT REPORTS (continued).04 Review of Opening Figures Additional Information CHANGES IN ACCOUNTING POLICIES SUBSEQUENT DISCOVERY OF A MISSTATEMENT SUBSEQUENT EVENTS REPORTS ON SUPPLEMENTARY MATTERS ARISING FROM AN AUDIT OR A REVIEW ENGAGEMENT CSRS

13 12/10 TOC 4-1 CHAPTER 4 ILLUSTRATIVE REVIEW WORKING PAPERS Section Page No. 400 INTRODUCTION WORKING PAPERS [Next page is 4-1]

14 12/15 TOC 5-1 CHAPTER 5 FORM AND PRESENTATION OF FINANCIAL STATEMENTS 500 INTRODUCTION TITLE PAGE General Name of Entity Title of Financial Statements Date or Period Covered TABLE OF CONTENTS PRACTITIONER S COMMUNICATION Letterhead Heading Addressee Salutations Signature Date BASIC FINANCIAL STATEMENTS What Are They? Approval Comparative Headings Reference to Practitioner s Communication Review Engagements Use of Term Unaudited Review Engagements Referencing Notes BALANCE SHEET Title Format STATEMENT OF INCOME Title Format STATEMENT OF RETAINED EARNINGS Title Combined Statement of Income and Retained Earnings Restatement of Retained Earnings

15 TOC /15 CHAPTER 5 FORM AND PRESENTATION OF FINANCIAL STATEMENTS (continued).04 Separate Statement of Retained Earnings CASH FLOW STATEMENT SIGNIFICANT ACCOUNTING POLICY NOTES When Required? What Should Be Included? Manner of Disclosure Basis of Presentation Other Disclosures Sample Disclosures OTHER NOTES TO FINANCIAL STATEMENTS General Format Title Referencing Notes in the Financial Statements Content (Disclosure Checklists) SUPPLEMENTARY OR OTHER INFORMATION General Content Presentation Reporting Schedule Headings Reference to Communication

16 08/12 TOC 5-3 CHAPTER 5 FORM AND PRESENTATION OF FINANCIAL STATEMENTS (continued) Section Description Page No. 560 ENTITIES THAT CHANGE FISCAL PERIOD Appendix 5A Illustrative Financial Statements with Review Engagement Report

17 12/15 TOC 6-1 CHAPTER 6 CASH FLOW STATEMENTS 600 INTRODUCTION Cash Flow Statement Requirement HOW CASH IS DEFINED Bank Overdraft (Indebtedness) Definitions Disclosure of Cash Details of Cash Components Policy of Reporting Restrictions BASIC ELEMENTS Types of Cash Flows Income Taxes Cash Flows from Investments using the Equity Method Cash Flows from Joint Ventures Accounted for using Proportionate Consolidation Business Combinations and Disposals of Business Units Cash Flows in Foreign Currencies GROSS AND NET CASH FLOWS Items Reported on a Gross Basis Items Reported on a Net Basis FORMAT CONSIDERATIONS Analysis of Cash for Reporting Period Title Order of Presentation Captions CASH FLOWS FROM OPERATING ACTIVITIES What Is Included? What Is Excluded? Basic Format Direct Method Indirect Method Which Method Is Better? Further Considerations for the Indirect Method Changes in Current Assets and Liabilities

18 TOC /15 CHAPTER 6 CASH FLOW STATEMENTS (continued).20 Supplemental Information Groupings of Accounts Non-Cash Entries to Current Assets and Liabilities CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures Disposal of Capital Assets Short-Term Investments Interest and Dividend Income CASH FLOWS FROM FINANCING ACTIVITIES Cash Dividends Withdrawals (Drawings) by Partners or a Sole Proprietor Short-Term and Long-Term Debt Shares Acquired by Company for Cancellation NON-CASH INVESTING AND FINANCING ACTIVITIES Disclosure REVIEW ENGAGEMENTS Documentation Practitioner s Communication

19 10/12 TOC 7-1 CHAPTER 7 UNINCORPORATED ENTITIES Section Description Page No. 700 INTRODUCTION FINANCIAL REPORTING AND ACCOUNTING Limited Liability Partnerships Other Bases of Accounting Review LOANS BETWEEN PARTNERS/PROPRIETOR AND UNINCORPORATED ENTITY Sole Proprietorships Partnerships Owner s Salaries and Interest on Invested Capital EQUITY SECTION OF BALANCE SHEET Sole Proprietorships Partnerships CHANGES IN PARTNERSHIP INTEREST Admission of a New Partner Bonus Method Goodwill Method Transactions During the Year Withdrawal or Death of a Partner Goodwill Method Sale of Partnership Interest COMBINED FINANCIAL STATEMENTS TYPES OF ENGAGEMENTS Reviews

20 02/16 TOC 8-1 CHAPTER 8 INTERIM FINANCIAL REPORTING 800 INTRODUCTION WHAT ARE INTERIM FINANCIAL STATEMENTS? Disclosure Changes in Accounting Estimates INTERIM REPORTING PERIODS General Application Highly Seasonal Business MATERIALITY FOR INTERIM REPORTING RECOGNITION AND MEASUREMENT General Criteria Revenues and Expenses More Specific Guidance on Application RESTATEMENTS Reporting Changes in Accounting Policies DISCONTINUED OPERATIONS Financial Statement Disclosure ERROR CORRECTIONS Financial Statement Disclosure REVIEW OF INTERIM FINANCIAL STATEMENTS Standards and Procedures Materiality and Risk Reporting Reservations

21 02/16 TOC 9-1 CHAPTER 9 RELATED PARTY TRANSACTIONS AND ECONOMIC DEPENDENCE 900 INTRODUCTION Overview of ASPE Variable Interest Entities WHAT ARE RELATED PARTY TRANSACTIONS? Definitions HOW ARE RELATED PARTY TRANSACTIONS MEASURED? Measurement Issues and Definitions Revised Standard Carrying Amount When is Carrying Amount Used? Illustration Using Carrying Amount Exchange Amount Leasing Arrangements with Related Parties Summary Graphic Illustration of Measurement Principles DISCLOSURE Examples of Note Disclosure ECONOMIC DEPENDENCE Examples of Note Disclosure Significant Volume of Transactions But No Economic Dependence Examples of Note Disclosure REVIEW ENGAGEMENTS Review Procedures Documentation Reporting GAAP Reservations Scope Reservations GAAP Reservation Economic Dependence

22 02/16 TOC 10-1 CHAPTER 10 SUBSEQUENT EVENTS 1000 INTRODUCTION WHAT ARE SUBSEQUENT EVENTS Type 1 Subsequent Events Type 2 Subsequent Events ACCOUNTING AND FINANCIAL REPORTING Type 1 Subsequent Events Type 2 Subsequent Events Going Concern Issues SUBSEQUENT EVENTS PERIOD General Requirement Practical Approach Inappropriate Approach REVIEW ENGAGEMENTS Risk-Based Review Review Procedures Documentation Review Engagement Reports GAAP Reservations: Type 1 Subsequent Events Scope Reservations GAAP Reservations: Type 2 Subsequent Events

23 02/16 TOC 11-1 CHAPTER 11 CONTINGENCIES 1100 INTRODUCTION WHAT IS A CONTINGENCY? Definition Three Categories of Contingencies ACCOUNTING AND FINANCIAL REPORTING General Disclosure Contingent Losses Likely Loss Reasonably Determinable Likely Loss Not Reasonably Determinable Outcome Not Determinable Unlikely Contingent Gains Going Concern Restrictive Debt Covenants Contingencies Resulting From Government Assistance Guarantees REVIEW ENGAGEMENTS Risk-Based Review Review Procedures No Contingencies Requiring Disclosure Contingencies Disclosed Documentation Review Engagement Reports GAAP Reservation Going Concern Scope Reservations

24 02/16 TOC 12-1 CHAPTER 12 CONTRACTUAL OBLIGATIONS COMMITMENTS 1200 INTRODUCTION WHAT ARE CONTRACTUAL OBLIGATIONS? Definition FINANCIAL STATEMENT DISCLOSURE What Should Be Disclosed? What Would Not Be Disclosed? Examples of Note Disclosure Commitments Involving Abnormal Speculative Risk Amount of Commitment Is Abnormal in Relation to the Entity Commitments that Affect the Level of Future Activities Leases Commitments with Related Parties REVIEW ENGAGEMENTS Risk-Based Review Review Procedures No Contractual Obligations Requiring Disclosure Contractual Obligations Disclosed Documentation Review Engagement Report Reservations Scope Reservations

25 02/16 TOC 13-1 CHAPTER 13 ACCOUNTING FOR INTERESTS IN JOINT ARRANGEMENTS 1300 INTRODUCTION WHAT ARE JOINT ARRANGEMENTS? Definitions Other Investments Types of Joint Arrangements POLICY CHOICES FOR INTERESTS IN JOINT ARRANGEMENTS Accounting for Joint Operations Accounting for Jointly Controlled Assets Accounting for Jointly Controlled Enterprises Cost method Equity method Proportion of Assets, Liabilities, Revenue and Expenses Advantages Loss of Joint Control ACCOUNTING FOR AN INVESTOR S CONTRIBUTIONS TO A JOINT ARRANGEMENT Contributions to the joint arrangement at the inception of the joint arrangement Contributions to the joint arrangement subsequent to its inception Related Party Transactions Statements at Different Dates Summary of Changes from ASPE 3055 to ASPE Contributions to a Joint Venture Under Section Accounting for a Venturer s Contributions to a Joint Venture - Section Recognition of Losses on Disposal of Net Assets Contributed to a Joint Venture Recognition of Gains on Disposals of Net Assets Contributed to a Joint Venture Contributions of Assets to a Joint Venture; Consideration Received is Cash and Other Assets Arm s Length Transactions Transactions Between a Venturer and a Joint Venture - Section Sales of Assets by a Venturer to a Joint Venture Purchases of Assets by a Venturer From a Joint Venture

26 TOC /16 CHAPTER 13 ACCOUNTING FOR INTERESTS IN JOINT ARRANGEMENTS (continued) 1320 FINANCIAL STATEMENT DISCLOSURE Required Presentations Required Disclosures Accounting Policy Note Examples Explanatory Notes to Financial Statements REVIEW ENGAGEMENTS GAAP Reservations Scope Reservations NOT-FOR-PROFIT ORGANIZATIONS Reporting Methods Proportionate Consolidation or Equity Method Financial Statement Disclosure Related Party Transactions Examples of Financial Statement Disclosure

27 02/16 TOC 14-1 CHAPTER 14 COMPILATION PROCEDURES NOTICE TO READER 1400 INTRODUCTION Not-for-Profit Organizations STANDARDS Nature and Terms of Engagement Professional Standards Withdrawal from an Engagement Notice to Reader Business and Professional Considerations ENGAGEMENT LETTERS Timing of Engagement Letters Updating Engagement Letters CHANGES IN TYPE OF ENGAGEMENT Decrease in Level of Service from Audit or Review to Compilation Change from Full Disclosure to Omission of Substantially All Disclosures COMPILATION PROCEDURES Basic Professional Judgment Regarding Extent of Procedures Procedures Not Normally Required Knowledge of the Client and Industry Subsequent Events and Contingencies Documentation Example of Note Disclosure Withdrawal from Engagement SUGGESTED WORKING PAPERS FINANCIAL STATEMENT DISCLOSURE AND GAAP Income Taxes Management Final Comment on Possible Misleading Financial Statements CHECKLISTS Trial Balance Preparation Checklist (Appendix D, CEC-1) Computer-Generated Trial Balance Preparation Checklist (Appendix D, CEC-2)

28 TOC /16 CHAPTER 14 COMPILATION PROCEDURES NOTICE TO READER (continued).08 Compilation Procedures Checklist (Appendix D, CEC-3) PRACTITIONER S COMMUNICATION NOTICE TO READER Standards Notice to Reader Communication Incomplete Financial Statements Independence Date of Notice to Reader Subsequent Discovery of Error Comparative Financial Statements Other Financial Information FORM AND PRESENTATION OF COMPILED FINANCIAL STATEMENTS Title page Basic Financial Statements Reference to Practitioner s Communication COMPILATION OF INTERIM FINANCIAL STATEMENTS Standards and Procedures Communication EXAMPLES OF OTHER SERVICES AND THE APPLICATION OF CPA Canada CURRENT DEVELPOPMENTS COMPILATION AGREEMENTS

29 02/16 TOC 15-1 CHAPTER 15 COMPILATION OF FORECASTS AND PROJECTIONS 1500 INTRODUCTION References DEFINITIONS Future-Oriented Financial Information (FOFI) Forecasts and Projections How is FOFI Presented? Time Period Assumptions GENERAL STANDARDS Basic Standards for FOFI Engagement Unresolved Issues FORM AND STYLE OF PRESENTATION Unaudited See Notice to Reader Statement Titles Comparative FOFI and Historical Financial Statements Title Page and Column Headings Summary of Disclosures ENGAGEMENT LETTER AuG-15 Requirement UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT Sources of Knowledge Level of Understanding Deficiencies in Assumptions Presentation Errors COMPILATION PROCEDURES AuG-16 Procedures Letter of Representation DOCUMENTATION Contents of Working Paper File PRACTITIONER S COMMUNICATION AuG

30 TOC /16 CHAPTER 15 COMPILATION OF FORECASTS AND PROJECTIONS (continued).03 Examples

31 10/12 TOC 16-1 CHAPTER 16 PERSONAL FINANCIAL STATEMENTS Section Description Page No GENERAL Personal Financial Statements Guidance Completeness of Information Type of Engagement ENTITY TO BE COVERED Ownership Information BASIS OF PRESENTATION Estimated Current Value Basis Historical Cost Cash or Accrual? Other Bases of Accounting FINANCIAL STATEMENTS Balance Sheet Statement of Changes in Net Worth Statement of Changes in Cash Resources Comparative Financial Statements CARRYING VALUES OF ASSETS AND LIABILITIES Estimated Current Values Range of Values Tax Shelters Potential Tax DISCLOSURES PERSONAL FINANCIAL STATEMENTS ENGAGEMENT General Acceptance of Clients Engagement Letters Inadequate Accounting Records/Gathering Information Personal Financial Statements Worksheet Client Representation Letters

32 TOC /12 CHAPTER 16 PERSONAL FINANCIAL STATEMENTS (continued) Section Description Page No COMPILATION OF PERSONAL FINANCIAL STATEMENTS Standards and Procedures Communication ILLUSTRATIVE PERSONAL FINANCIAL STATEMENTS Appendix 16A Illustrative Personal Financial Statement with Notice to Reader ( Bare-Bones )

33 12/10 TOC 17-1 CHAPTER 17 ILLUSTRATIVE COMPILATION WORKING PAPERS Section Description Page No INTRODUCTION WORKING PAPERS [Next page is 17-1]

34 02/16 A-1 APPENDIX A CORRESPONDENCE/LETTERS (CL) Instructions This Appendix provides samples of the correspondence that is commonly used during review and compilation engagements. Your firm s own letters may also be added to the and maintained in this binder. Professional judgment The use of these sample letters depends on the practitioner s professional judgment and each letter should be tailored, where necessary, to meet both the needs of the client and your firm. CL-1 CL-2 CL-3 CL-4 CL-5 CL-6 CL-7 1 CL-8 CL-9 CL-10 CL-11 CL-12 CL-13 CL-14 CL-15 CL-17 Communication with Predecessor...A-3 Illustrative Engagement Letter Review...A-5 Illustrative Engagement Letter Compilation...A-9 Engagement Letters Additional Matters...A-11 Illustrative Engagement Letter Financial Projection...A-19 Illustrative Engagement Letter Compilation Personal Financial Statements...A-23 Illustrative Representation Letter Personal Financial Statements...A-25 Illustrative Representation Letter Financial Projection...A-26.1 Client Billing Review Engagement...A-27 Client Billing Compilation Engagement...A-29 Transmittal Letter for Computer-Produced Records and Returning Documents and Vouchers...A-31 Transmittal Letter for Practitioner Acting in the Capacity of a Typing Service Only...A-33 Transmittal Letter for Processing Financial Data for Clients of Other Accounting Firms...A-35 Transmittal Letter for Personal Income Tax Returns...A-37 General Transmittal Letter Drafting Form...A-39 Journal Entries Approval Form...A-41 1 For a general representation letter, see Appendices 2A and 2B.

35 02/16 B-1 APPENDIX B REVIEW ENGAGEMENT FORMS (REF) Instructions This Appendix provides various forms that can be used for review engagements as discussed in this Guide. Some firms, however, may modify some of these forms also for compilation engagements. Any other forms that your firm uses may also be added to the and maintained in this binder. Professional judgment The use of these forms depends on the practitioner s professional judgment. Forms should be tailored, where necessary, to meet the needs of the engagement. For those forms that are updated and carried forward annually, the original may be removed from the prior year working paper file before making any changes, and replaced with a photocopy. REF-1 REF-2 REF-3 REF-4 REF-5 REF-6 REF-7 REF-8 REF-9 REF-10 REF-12 REF-13 REF-14 Firm Policies...B-3 Engagement Acceptance Form...B-11 Planning Notes Review Engagement...B-17 Knowledge of Business Form...B-20.1 Materiality Guidance Worksheet...B-29 Schedule of Unadjusted Misstatements...B-31 Year End File...B-33 Analytical Procedures Worksheet...B-35 Consultation Documentation Form...B-39 Personal Financial Statement Preparer s Worksheet...B-41 Pre-Release Review Form...B-53 Routing Instructions for Processing Financial Statements...B-57 Staff and Partners Acknowledgement of Independence...B-59

36 02/16 C-1 APPENDIX C REVIEW ENGAGEMENT CHECKLISTS (REC) Instructions This Appendix provides checklists for review engagements as discussed in this Guide starting with a general review engagement checklist and continuing with specialized checklists for specific circumstances and types of financial statements. Any other checklists that your firm uses may also be added to the and maintained in this binder. Professional judgment The use of these checklists depends on the practitioner s professional judgment. Checklists that are used should be tailored, where necessary, to meet the needs of the engagement. REC-1 REC-2 REC-2a REC-2b REC-2c REC-2d REC-2e REC-2f REC-2g REC-2h REC-2i REC-2j REC-3 REC-4 REC-5 REC-6 REC-7 Review Engagement Checklist (general)...c-3 Introduction to Supplementary (or Specialized) Review Engagement Checklists...C-11 Revenue Recognition...C-13 Cash Flow Statement...C-17 Related Party Transactions and Economic Dependence...C-19 Interests in Joint Arrangements...C-21 Subsequent Events...C-25 Contingencies...C-27 Contractual Obligations...C-31 Financial Instruments...C-33 Derivative Instruments...C-37 Goodwill and Other Intangible Assets...C-39 Review Engagement Report Checklist...C-43 Not-for-Profit Organizations...C-45 Interim Review Engagements...C-47 Technical Review Checklist...C-55 Engagement Partner s Checklist...C-57

37 12/10 D-1 APPENDIX D COMPILATION ENGAGEMENT CHECKLISTS AND FORMS (CEC) Instructions This Appendix provides checklists and forms for compilation engagements as discussed in this Guide. Any other checklists and forms that your firm uses may also be added to the and maintained in this binder. Professional judgment The use of these checklists and forms depends on the practitioner s professional judgment. Checklists and forms that are used should be tailored, where necessary, to meet the needs of the engagement. CEC-1 Preparation Checklist General... D-3 CEC-2 Preparation Checklist Computer-Generated Trial Balance... D-5 CEC-3 Compilation Procedures Checklist... D-9 CEC-4 Compilation Procedures Checklist Forecast and Projection Engagements... D-11 CEC-5 Supplementary Compilation Procedures Checklist Personal Financial Statements... D-15

38 12/10 E-1 APPENDIX E FINANCIAL STATEMENT DISCLOSURE CHECKLIST (DC) DC-1 Presentation and Disclosure Requirements for Financial Statements Prepared under Canadian Accounting Standards for Private Enterprises... E-3