SSARS No. 22 – Compilation of Pro Forma Financial statement supersedes SSARS No. 14, and will be codified as AR-C section 120. SSARS No. 22 takes effect for compilation reports on pro forma financial information dated on or after May 1, 2017, and is testable on the CPA Exam in the first testing window beginning after the pronouncement’s effective date, or July 2017.
For a compilation of pro forma financial information, the accountant is required to apply accounting and financial reporting expertise to assist management in the presentation and reporting of pro forma financial information, without obtaining or providing any assurance on the pro forma financial information. SSARS No. 22 defines pro forma financial information to be:
A presentation that shows what the significant effects on historical financial information might have been had a consummated or proposed transaction (or event) occurred at an earlier date.
In addition to complying with AR-C section 120, an accountant is required to comply with AR-C section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services.
SSARS No. 22 addresses the following areas in regards to a compilation of pro forma financial information: independence, acceptance/continuance of client relationships, agreement on engagement terms, the accountant’s knowledge and understanding of the entity’s financial reporting framework, compilation procedures, the accountant’s compilation report, and documentation.