Question

In addition to the Statements on Standards for Accounting and Review Services (SSARS), which of the following standards must also be complied with in an annual review of the financial statements of a nonissuer?

a. Generally Accepted Auditing Standards (GAAS)
b. International Financial Reporting Standards (IFRS)
c. Statements on Auditing Standards (SAS)
d. Generally Accepted Accounting Principles (GAAP)

Answer 1

In an annual review of the financial statements of a nonissuer, along with SSARS, GAAP must be complied with. GAAS and SAS apply to audits, not reviews, and IFRS may apply based on jurisdiction but are separate from review standards.

Step-by-step explanation:

In an annual review of the financial statements of a nonissuer, in addition to the Statements on Standards for Accounting and Review Services (SSARS), the standards that must also be complied with are the Generally Accepted Accounting Principles (GAAP). While Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) are relevant for audits, SSARS is a different set of standards that apply to reviews, which are less in scope than audits. The International Financial Reporting Standards (IFRS) might be applicable if the company operates in a jurisdiction where IFRS is required, but they are separate from the review or audit standards.

Therefore, the correct answer to this question is d. Generally Accepted Accounting Principles (GAAP), as GAAP is the set of accounting principles that companies must follow when preparing their financial statements in the United States, which is what the SSARS address in the context of review engagements.