Open AccessNew standards for compilation and review engagements: some implications for real‐estate developers
Author(s) -
Reinstein Alan,
Lander Gerald H.
Publication year - 2005
Publication title -
briefings in real estate finance
Language(s) - English
Resource type - Journals
eISSN - 1555-0990
pISSN - 1473-1894
DOI - 10.1002/bref.3
Subject(s) - accounting , documentation , audit , real estate , certification , accounting standard , executive summary , financial statement , financial accounting , public interest , business , finance , accounting information system , economics , computer science , political science , management , law , programming language
The Accounting and Review Services Committee of the American Institute of Certified Public Accountants recently issued three authoritative pronouncements relating to the compilation and review engagements of the CPA. These standards apply to all certified public accountants (CPAs) performing such compilation and review engagements. Statement on Standards for Accounting and Review Services numbers 9–11 affect parts of their practice that will be of interest to real‐estate developers, who generally do not receive audited financial statements. Instead, they normally receive compilations (which focus on the form of the financial statements and provide no assurances of the conformity of the financial statements with generally accepted accounting principles) or reviews (which use inquiries and analytical procedures to provide limited assurances that the financial statements conform with generally accepted accounting principles). The new standards require CPAs to be much more rigorous in preparing compilations and reviews, which will force developers to provide CPAs with additional information, and almost certainly to pay higher fees, given the extra time and documentation involved. The purpose of this paper is to summarize these new standards and to highlight their impact on real‐estate developers.