Warren L. Eisenberg Partner, Philadelphia Office
Presented before the Nashville Chapter, Tennessee Society of Certified Public Accountants-October 1974
In 1968 the American Institute of Certified Public Accountants issued Statement on Auditing Procedure No. 38, "Unaudited Financial Statements," to clarify the reporting requirements and other responsibilities of a CPA in connection with unaudited financial statements. SAP No. 38 was incorporated
in Statement on Auditing Standards No. 1 as section 516,1 and in March 1974 the Institute distributed a revised exposure draft of a Guide for Engagements of CPAs To Prepare Unaudited Financial Statements.2
The Guide, which is intended to apply when a CPA is associated with unaudited financial statements, begins to establish minimum standards for the profession. These definitive guidelines, I am sure, are the result of the judgment against a CPA in the now famous 1136 Tenants' Corporation case and the public's increasing reliance on a statement with which a CPA is associated, even though it be unaudited. This paper discusses some of the more significant matters included in the Guide and comments on the suggested procedures set forth.
The Guide divides the subject into five parts:
1. Unaudited financial statements, including a definition of accounting services, determination of whether statements are unaudited, distinctions between types of disclaimers and association with unaudited financial statements
2. Engagement letters
3. Professional care
1. Committee on Auditing Procedure, "Codification of Auditing Standards and Procedures," Statement on Auditing Standards No. 1 (New York: American Institute of Certified Public Accountants, 1973).
2. The final version of the Guide has now been published: Task Force on Unaudited Financial Statements, Auditing Standards Division, Guide for Engagements of CPAs To Prepare Unaudited Financial Statements (New York: American Institute of Certified Public Accountants, 1975).