Accounting & Bookkeeping & Small Business Forum

[Guest]

I have been recently contacted by 2 Bar-Restaurant Owners who were looking for an accountant to prepare compiled statements for 4 bars that they own. I am located in NYC. To date, I believe there are no restrictions on who can prepare compiled statements and there doesn't seem to be any restrictions on who can prepare reviewed statements (except in the case of Nonprofits). However, the Board of Regents as well as the AICPA discourage the practice by not suggesting any safe harbor language that can be used by non-CPA's for the cover letter that would accompany the statements. In fact they seem to want to intimidate non-CPA's from providing any service that hints of professionalism. I happen to know that many creditors, insurance companies, lenders, and even banks in New York will accept compiled statements from non-CPA accountants. The problem is developing a cover letter where the language would be safe and yet not use references that would otherwise be reserved for CPA prepared statements. For compiled statements, the level of assurance given by a non-CPA appears to be exactly the same as that of the CPA, ie., "silch." As far as the formatting of compiled statements are concerned, it would appear that anyone trained to do this (I am trained) could do the proper formatting and make proper disclosures if any are needed. Does anyone have experience in this area, especially relative to Safe Harbour Language for bookkeepers. It seems to be that there should be an acceptable way that bookkeepers can serve their clients' needs without running afoul of the law.

[Guest]

ROBERT: FIRST OF ALL TO DO REVIEWS YOU NEED TO BE A CPA. AS FAR AS SAFE HARBOR CHECK YOUR STATE BOARD OF ACCOUNTANCY WEBSITE AND/OR STATE LAW UNDER THE UNIFORM ACCOUNTING ACT. IF IT IS LIKE MINNESOTA, IT WILL GIVE LANGUAGE FOR NON ACCOUNTANTS TO USE TO BE IN COMPLIANCE WITH STATE LAW.

[Guest]

California -

Article last amended 1/23/2004 Accountancy Regulations Article 1, Page 3
Section 4. Safe Harbor Language.
A person who is not licensed by the California Board of Accountancy, and who
prepares a financial report in a form substantially the same as that set forth in
subsection (a) or (b) below, shall not be deemed to be engaged in the practice of public
accountancy as defined in Section 5051 of the Business and Professions Code.
(a) “I [we] have prepared the accompanying financial statements of [name of entity] as
of [time period] for the [period] then ended. This presentation is limited to preparing in
the form of financial statements information that is the representation of management
[owners].
I [we] have not audited or reviewed the accompanying financial statements and
accordingly do not express an opinion or any other form of assurance on them.”
(b) “We [I] have prepared the accompanying statement of assets, liabilities and equity
for [name of company] as of [month-day-year], together with the related statements of
revenue, expense, [and cash flow] for the year [or month] then ended on the income tax
basis of accounting.
The preparation of financial statements on the income tax basis of accounting is
limited to presenting information that is the representation of management [the owners].
We [I] have not audited nor reviewed the accompanying statements. Accordingly, we [I]
do not express an opinion or any other form of assurance on them.
Management has [The owners have] elected to omit substantially all of the disclosures
ordinarily included in financial statements prepared on the income tax basis of
accounting. If the omitted disclosures were included in the financial statements, they
might influence the user’s conclusions about the company’s assets, liabilities, equity,
revenues, expenses [and cash flow]. Accordingly, these financial statements are not
designed for those who are not informed about such matters.”
NOTE: Authority cited: Sections 5010, Business and Professions Code. Reference:
Sections 5051 and 5052, Business and Professions Code.