Reliability Project aims to change the performance and reporting of review engagements

The AICPA’s Accounting and Review Services Committee (ARSC) launched the Reliability Project to reconcile the marketplace’s demands for their CPAs to be involved in their financial reporting without impairing the CPAs’ independence.

If a CPA’s independence has been impaired for any reason, a CPA may perform a compilation but is required to note his or her lack of independence in the report. A CPA is prohibited from performing a review if independence is impaired.

The AICPA’s independence rules have recently been attacked by financial statement users and other stakeholders as being be an obstacle in helping smaller companies provide reliable financial statements. The independence rules require that CPAs engaged in certain control activities for a company are precluded from performing limited assurance engagements – meaning reviews – for that company.

The Reliability Project is not about eliminating the need for independence in a compilation or a review, but repositioning the independence requirement with respect to a review engagement.

Proposed revisions for the ARSC Reliability Project will go through full due process and exposure. The ARSC is expected to expose a new standard by the spring of 2009. For more background information on the Reliability Project, visit the Society’s Issue Monitoring page.

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