Route To: Partners Managers Staff File General Update Features LIST OF SUBSTANTIVE CHANGES AND ADDITIONS PPC's Guide to Write Up Services Twenty third Edition (November 2015) The following are some of the features of the 2016 Edition of PPC's Guide to Write Up Services: SSARS No. 21. In October 2014, the Accounting and Review Services Committee issued SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification. SSARS No. 21 is the most significant change to the Statements on Standards for Accounting and Review Services (SSARS) since their inception in 1978. It supersedes all outstanding SSARS through SSARS No. 20, except SSARS No. 14, Compilation of Pro Forma Financial Information, and introduces a new level of service preparation of financial statements. It is effective for periods ending on or after December 15, 2015. Your Guide has been fully updated to incorporate the requirements of SSARS No. 21, including revised engagement letters, checklists, and much more. We ve also added guidance and practice aids for the new preparation of financial statements service. You won t be able to comply with the requirements of SSARS No. 21 without the updated guidance and practice aids in this edition. Payroll Compliance. Payroll compliance and administration rules can be complex and are constantly changing. We ve updated this edition of the Guide to include the latest payroll tax law changes. The payroll tax preparation checklists are updated for the latest payroll tax forms and make it easy for you to prepare your clients numerous payroll filings accurately and efficiently. Recently Issued Professional Pronouncements. Practice aids and guidance throughout your Guide have been updated for all recently issued professional pronouncements to make sure you apply the latest guidance in your engagements. Recently Enacted Tax Legislation. We have updated the Guide for the provisions of relevant new tax acts. GENERAL 1. Changed the term nonissuer to nonpublic entity. Throughout 2. Changed the term illegal acts to noncompliance with laws and Throughout regulations. 3. Changed the term OCBOA to special purpose framework. Throughout CHAPTER 2 Bookkeeping Services wusp16sub 1. Added a discussion on the SSARS No. 21 elimination of the use of the term OCBOA. 2. Noted that there was a recent bill introduced, the Remote Transactions Parity Act of 2015, that gives states greater latitude to charge sales tax on online purchases from out of state customers. 1 Paragraph 202.19 Paragraph 205.10, footnote 13 3. Updated the state sales tax information. Exhibit 2 5 4. Updated the state sales tax information. Appendix 2G
CHAPTER 3 Payroll and Payroll Tax Services 5. A new form, Engagement Independence Compliance and Nonattest Services Documentation Form, replaces the Nonattest Services Documentation Form. 1. Noted that the IRS has a web page where small businesses can check to see if a third party payroll provider is complying with certain IRS requirements. 2. Added a discussion about obtaining an engagement letter when acting as a payroll service bureau or performing any payroll services for clients. 3. Updated the discussion on obtaining the employer identification number to note that the IRS requires all domestic EIN requests to be submitted online, by mail, or via fax. Appendix 2J Paragraph 301.11, footnote 2 Paragraph 301.20 Paragraph 302.4 4. Updated the Employee Payroll Information Sheet exhibit. Exhibit 3 4 5. Noted that the USCIS has a Form I 9 Desktop Widget that allows employers to access a fillable Form I 9 online. 6. Noted an increase in the 2015 ceiling for earned income credit to $44,651 for married filing jointly and $39,131 for all others. 7. Added a note discussing proposed changes to IRS overtime regulations. Paragraph 302.22, footnote 9 Paragraph 302.37 Paragraph 303.3, footnote 13 8. Updated the FLSA Exemptions exhibit. Exhibit 3 6 9. Updated the discussion and withholding examples for 2015 social security and Medicare withholding amounts. 303.33, 303.42.44, and 303.52 10. Updated the ranges of state unemployment rates and wage base Paragraph 303.46 levels. 11. Updated the payroll tax deposit calculation worksheet exhibit. Exhibit 3 12 12. Updated the discussion on electronic tax deposits. 304.7.12 13. Updated the discussion on Form 941 (Employer s Quarterly Federal Tax Return) for changes made to the form in 2015. 14. Updated the 401(k) pretax contributions and additional catch up payment limits. 305.5.7 Paragraph 305.9 15. Updated the threshold for adoption assistance. 305.9 and 305.73 16. Updated the discussion on electronic filing for the IRS s Modernized e File (MeF) program. 17. Updated the discussion on Form 944 (Employer s Annual Federal Tax Return) for changes made to the form in 2015. 18. Noted that for Form W 2 filings due on or after January 1, 2017, extensions of time to file Form W 2 with the SSA will no longer be automatic. 305.10.14 305.21.24 Paragraph 305.57, footnote 33 2
CHAPTER 4 Preparing Financial Statements 19. Updated the discussion and the exhibits on Form W 2 and Form 1099 penalties to note that the Trade Preference Extension Act of 2015 increases failure to file information return penalties for information returns filed after December 31, 2015. 305.59, footnote 34 and 305.86, footnote 36, and Exhibits 3 14 and 3 15 20. Updated the Employee Payroll Information Sheet. Appendix 3A 21. Updated the Payroll Tax Deposit Calculation Worksheet. Appendix 3D 22. Updated the EFTPS Preparation Checklist. Appendix 3E 23. Updated the FUTA Tax Worksheet. Appendix 3G 24. Updated the Form 940 Preparation Checklist for 2015 changes. Appendix 3J 25. Updated the Form 941 Preparation Checklist for 2015 changes. Appendix 3K 26. Updated the Form 941 or Form 944 Internal Reconciliation for 2015 Appendix 3L changes. 27. Updated the Form W 2 Preparation Checklist for 2015 changes. Appendix 3O 28. Updated the Form W 3 Internal Reconciliation for the adoption Appendix 3P assistance change in 2015. 29. Updated the reconciliation of Forms 941 or 944 to Form W 3 for Appendix 3Q 2015 changes. 30. Updated the State Employment Tax Information. Appendix 3S 31. Updated the list of selected payroll service bureaus, online payroll Appendix 3V services, and service bureau software for additional vendors and changes in names, Internet addresses, and payroll service providers or vendor comments. 32. Updated illustrative payroll tax forms to include the most current payroll tax forms available when this Guide was completed. 33. Updated the Other Special Compensation Checklist for the adoption assistance change in 2015. 34. Updated the Form 944 (Employer s Annual Federal Tax Return) Preparation Checklist for 2015 changes. 1. Updated the discussion on the SSARS clarity project to reflect the issuance of SSARS No. 21. 2. Updated the discussion on preparing and compiling financial statements for SSARS No. 21. 3. Updated the discussion on referencing to accountants report for SSARS No. 21. Appendix 3W Appendix 3X Appendix 3Y 400.17.19 Section 401 Paragraph 402.14 4. Revised the discussion of statement titles for SSARS No. 21. Paragraph 403.3 5. Updated the discussion on intangible assets and deferred costs. Paragraph 403.32 6. Updated the discussion on income statement items presented separately for ASU 2015 01, Simplifying the Income Statement by Eliminating the Concept of Extraordinary Items. 7. Revised the discontinued operations discussion to fully integrate ASU 2014 08 and remove superseded guidance. 404.9.15 404.16.19 3
CHAPTER 5 Considering the Form of Entity CHAPTER 6 Proprietorships CHAPTER 7 Partnerships CHAPTER 8 C Corporations 8. Updated the discussion on supplementary information for SSARS No. 21. 9. Updated the accountants compilation reports in the illustrative financial statements for SSARS No. 21. 410.1.2 Appendix 4A 1 and 4A 2 10. Revised the compilation reporting checklist for SSARS No. 21. Appendix 4B 1 11. Updated the summarized disclosure checklist for recently issued Appendix 4B 2 pronouncements. 1. Updated the exhibit comparing various business entities. Exhibit 5 1 1. Updated the Health Savings Accounts (HSAs) amounts. Paragraph 602.3 2. Updated the discussion on additional first year depreciation. Paragraph 602.14 3. Updated the Section 179 limit amounts. Paragraph 602.15 4. Updated the penalty for failure to timely file a return discussion to Paragraph 603.9 note that the penalty will be indexed annually for inflation. 5. Updated the preparer penalties discussion. 603.14.15 6. Updated the mandatory electronic filing requirements. Paragraph 603.16 7. Updated the illustrative Schedule C (Form 1040) with the most Appendix 6A recent federal tax form available when this Guide was completed. 1. Updated the Health Savings Accounts (HSAs) amounts. Paragraph 702.7 2. Updated the discussion on additional first year depreciation. Paragraph 702.31 3. Updated the Section 179 limit amounts. Paragraph 702.32 4. Noted that the recently enacted Surface Transportation and Paragraph 703.8 Veterans Health Care Choice Improvement Act of 2015 includes significant changes to the filing deadline and extension for partnerships. 5. Updated the penalty for failure to timely file a return discussion to Paragraph 703.10 note that the penalty will be indexed annually for inflation. 6. Updated the preparer penalties discussion. 703.12.13 7. Updated the illustrative Form 1065, Form 1125 A, Form 4562, and Appendix 7A Schedule K 1 (Form 1065) with the most recent federal tax forms available when this Guide was completed. 1. Noted that, for 2015, the top individual tax rate is 39.6%. Paragraph 802.5 2. Updated the Health Savings Accounts (HSAs) amounts. Paragraph 802.19 3. Updated the discussion on additional first year depreciation. Paragraph 802.26 4. Updated the Section 179 limit amounts. Paragraph 802.27 5. Noted that the recently enacted Surface Transportation and Paragraph 803.6 Veterans Health Care Choice Improvement Act of 2015 includes significant changes to the filing deadline and extension for C corporations. 4
CHAPTER 9 S Corporations CHAPTER 11 Limited Liability Companies CHAPTER 12 Managing a Write up Practice 6. Updated the penalty for underpayment of estimated tax discussion for recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Paragraph 803.10 7. Updated the preparer penalties discussion. 803.11.12 8. Updated the illustrative Form 1120, Form 1125 A, Form 1125 E, Appendix 8A Schedule D (Form 1120), and Form 4562 with the most recent federal tax forms available when this Guide was completed. 1. Updated the note about a bill to permanently revert to a five year holding period. 901.5, footnote 5, and 903.5, footnote 6 2. Updated the maximum qualifying compensation limit for 2015. Paragraph 903.22 3. Updated the Health Savings Accounts (HSAs) amounts. Paragraph 903.31 4. Updated the discussion on additional first year depreciation. Paragraph 903.39 5. Updated the Section 179 limit amounts. Paragraph 903.40 6. Updated the preparer penalties discussion. 904.16.17 7. Updated the illustrative Form 1120S, Form 1125 A, Form 4562, and Appendix 9A Schedule K 1 (Form 1120S) with the most recent federal tax forms available when this Guide was completed. 1. Updated the Health Savings Accounts (HSAs) amounts. Paragraph 1102.7 2. Updated the discussion on additional first year depreciation. Paragraph 1102.35 3. Updated the Section 179 limit amounts. Paragraph 1102.36 4. Noted that the recently enacted Surface Transportation and Paragraph 1103.8 Veterans Health Care Choice Improvement Act of 2015 includes significant changes to the filing deadline for LLC s. 5. Updated the penalty for failure to timely file a return discussion to note that the penalty will be indexed annually for inflation. 6. Added discussion and exhibit about penalties that may be assessed for failing to file information returns, including failure to file correct Schedule K 1 with the IRS and/or to furnish copies to the LLC members. Paragraph 1103.10 Paragraph 1103.10 and Exhibit 11 1 7. Updated the preparer penalties discussion. 1103.12.13 1. Added a discussion on why the authors believe that it is important to obtain a bookkeeping engagement letter. 2. Added a discussion on engagement letters for preparation services under SSARS No. 21. 3. Updated the engagement letter for compilations discussion for SSARS No. 21. 4. Added preparation engagements to the relationship of SSARS to Quality control standards discussion. Paragraph 1204.4 1204.5.6 1204.7.8 Paragraph 1209.6 5
CHAPTER 13 Write up Software 5. Added engagements where the acceptance and continuance decision caused reason for concern to the list of situations that may be considered in establishing EQCR criteria. 6. Added a discussion on the engagement level quality control requirements of AR C 60. 7. Added a discussion on the peer review of SSARS No. 21 preparation engagements. 8. Revised the communication of suspected fraud or noncompliance with laws and regulations discussion for SSARS No. 21. 9. Added a Relation to You column in the personal references chart on the Employment Application. Paragraph 1209.17 1209.19.28 1209.35.36 Paragraph 1210.17 Appendix 12A 10. Added instructions to the candidate screening form. Appendix 12B 1 11. Revised the accounting skills test for 2015 changes. Appendix 12C 12. Revised the acceptance and continuance form for SSARS No. 21. Appendix 12E 13. Added a new illustrative engagement letter for bookkeeping, Appendix 12G financial statement preparation, and tax services. 14. Revised the assessment to include a question in regards to Appendix 12M identifying successor candidates for retiring partners. 15. Added a new illustrative engagement for compilation, bookkeeping, Appendix 12S and financial statement preparation services. 16. Updated the illustrative engagement letter for the preparation of Appendix 12T GAAP basis financial statements. 1. Enhanced the discussion of the Business Software Alliance watchdog group. 2. Updated the list of selected write up software packages for changes in name, website, and programs. 3. Updated the list of selected software review sources, information services, and popular accounting websites. 4. Updated the list of selected online accounting services for changes in name, website, and programs. 5. Updated the list of selected fixed asset software for changes in name, website, and programs. 6. Updated the list of selected payroll software for changes in name, website, and programs. 7. Updated the list of selected practice management software for changes in name, website, and programs. 1302.22.24 Appendix 13B Appendix 13C Appendix 13D Appendix 13F Appendix 13H Appendix 13I 6