AR-C 90.82–.87: Complete Guide to Scope, Requirements, and Enforcement

Table of Contents#

1. Where Do AR-C 90.82–.87 Fit in SSARS Framework?
2. Scope of AR-C 90.82–.87 (Paragraph .82)
3. Core Requirements of AR-C 90.83–.86 3.1 Read All Accompanying Other Information 3.2 Identify Material Inconsistencies and Misstatements 3.3 Resolve Identified Issues With Management 3.4 Mandatory Documentation Requirements
4. Enforcement of AR-C 90.82–.87 (Paragraph .87)
5. Practical Compliance Tips
6. Final Takeaways
7. References

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1. Where Do AR-C 90.82–.87 Fit in SSARS Framework?#

AR-C Section 90 applies exclusively to compilation engagements for private, non-issuer entities. Unlike audit or review engagements, compilations require no testing of transaction records, no internal control assessments, and no formal assurance of the accuracy of financial statements.

Paragraphs .82 through .87 were added to AR-C 90 to address a common risk: compiled financial statements are often included in larger public or internal documents (e.g., annual reports, fundraising materials, regulatory filings) that contain additional, unvetted information that could conflict with the compiled financials or mislead users. These paragraphs set clear, mandatory rules for accountants to mitigate this risk.

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2. Scope of AR-C 90.82–.87 (Paragraph .82)#

Paragraph .82 defines exactly when these rules apply and when they do not:

In Scope#

The requirements apply if:

• You have completed a compilation engagement and issued an official compilation report
• Your report and the associated compiled financial statements are included in a larger document that contains other information (content separate from the financials and your report)
• You have consented to your compilation report being included in the larger document

Examples of qualifying other information include:

• Annual shareholder reports
• Board of directors meeting packets
• Private fundraising pitch decks and offering documents
• State regulatory filings that require compiled financial statements as an attachment
• Corporate sustainability or ESG reports that include financial performance data

Out of Scope#

The requirements do NOT apply if:

• You only provide compiled financial statements directly to management, with no plan to include your report in a larger public or third-party document
• The larger document is marked "draft" and will not be distributed to external stakeholders
• You do not consent to your compilation report being included in the larger document

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3. Core Requirements of AR-C 90.83–.86#

The four core requirements laid out in paragraphs .83 through .86 are designed to be low-burden while reducing risk for both accountants and financial statement users.

3.1 Read All Accompanying Other Information (Paragraph .83)#

The accountant must read all other information included in the document that contains their compilation report, per the following rules:

• If the other information is available before you release your compilation report, complete the review prior to issuing your report
• If the other information is added to the document after your report is released, complete the review as soon as practicable after you receive a copy of the final document
• Note: You are not required to audit, verify, or perform testing on the other information – a high-level read to spot obvious errors is all that is required

3.2 Identify Material Inconsistencies and Misstatements (Paragraph .84)#

During your review of the other information, you are required to flag two types of material issues:

1. Material inconsistencies: Content in the other information that directly conflicts with data presented in the compiled financial statements (e.g., an annual report claims $12.2M in 2023 revenue, but the compiled financials list$9.7M in revenue)
2. Material misstatements of fact: Content that is clearly and factually incorrect, even if it does not conflict with the financial statements (e.g., the report claims the company holds 12 active patents, but you know the company only has 3 registered patents)

Materiality follows standard accounting definitions: an error is material if it would influence the decision of a reasonable user of the document (e.g., a lender, investor, or regulator).

3.3 Resolve Identified Issues With Management (Paragraph .85)#

If you identify a material inconsistency or misstatement, you are required to take the following sequential steps:

1. Notify management in writing of the identified issue, and request that they correct the error
2. If management agrees to correct the issue, confirm the correction is made before releasing your compilation report or before the larger document is distributed to third parties
3. If management refuses to correct the issue:
   • Add a separate explanatory paragraph to your compilation report that clearly describes the uncorrected misstatement, if the error is unrelated to the compiled financial statements
   • If the error relates to the accuracy of the compiled financial statements themselves, consider withdrawing from the engagement (per applicable law and regulation)
   • Consult legal counsel if withdrawal is not permitted under local rules or if you face potential liability for the uncorrected misstatement

3.4 Mandatory Documentation Requirements (Paragraph .86)#

You must retain the following records in your engagement workpapers for a minimum of 5 years (per AICPA record retention rules):

• A full copy of all other information you reviewed
• Written documentation of all inconsistencies or misstatements you identified
• Records of all communications with management and those charged with governance about the identified issues, including their formal responses
• Documentation of all actions you took to resolve the issues (e.g., changes to your compilation report, withdrawal notice, legal consultation records)

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4. Enforcement of AR-C 90.82–.87 (Paragraph .87)#

Paragraph .87 explicitly states that compliance with all requirements in .82 through .86 is mandatory for all CPAs performing compilation engagements subject to SSARS. Non-compliance is considered a violation of professional standards, and may result in the following enforcement actions:

1. AICPA penalties: Reprimand, mandatory continuing education, suspension, or permanent expulsion from AICPA membership
2. State board of accountancy penalties: Fines, temporary suspension, or permanent revocation of your CPA license, depending on the severity of the violation
3. Civil liability: Third parties who rely on the misleading document may file a professional liability claim against you for damages incurred as a result of the uncorrected misstatement
4. Regulatory penalties: If the document is used in a securities offering or regulatory filing, you may face fines or sanctions from state securities regulators or other relevant government bodies

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5. Practical Compliance Tips#

To avoid non-compliance with minimal additional work:

1. Add a clause to your compilation engagement letter that requires management to provide you with a full copy of all documents that will include your compilation report at least 3 business days before planned distribution
2. Include a disclaimer in your compilation report clarifying that you have not audited or verified the accuracy of other information included in the document, beyond the high-level review required by SSARS
3. If you are unsure whether an identified error meets the materiality threshold, consult your firm’s quality control team or an independent SSARS subject matter expert before making a decision
4. If management refuses to correct a material misstatement, always document your concerns in writing and consult legal counsel before allowing your report to be included in the final document

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6. Final Takeaways#

AR-C 90.82–.87 is a small but critical component of SSARS that protects both accountants and financial statement users from misleading information in documents containing compiled financials. The requirements are low-burden, but failing to follow them can lead to severe professional, financial, and reputational consequences for CPAs, and significant risk for business owners that rely on compilation services.

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References#

1. American Institute of Certified Public Accountants (AICPA). (2024). Codification of Statements on Standards for Accounting and Review Services: AR-C Section 90. Retrieved from https://www.aicpa.org/research/standards/ssars.html
2. AICPA Professional Ethics Division. (2023). Compilation Engagement Compliance Guide for Small Firms. Retrieved from https://www.aicpa.org/interestareas/privatecompaniespracticeresources/accountingandreview/compliance-guide.html
3. National Association of State Boards of Accountancy (NASBA). (2022). Uniform SSARS Enforcement Guidelines for State Regulatory Bodies. Retrieved from https://www.nasba.org/regulation/professional-standards/ssars-enforcement/