Appendix 7A-1

OFS 8/14 7-43

APPENDIX 7A-1

Compilation—Statement of Cash Receipts and Disbursements Only (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State I (We) have compiled the accompanying statement of cash receipts and disbursements of XYZ Company (an S corporation) for the year ended December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the cash basis of accounting. Management is responsible for the preparation and fair presentation of the financial statement in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statement. My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statement.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 19, Compilation Exhibit B (AR 80.64). 2. If the financial statements omit substantially all disclosures, the accountant may choose to add the following phrase describing the OCBOA to the last sentence of the first paragraph of this report:

, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The following paragraph also would be added to the report:

Management has elected to omit substantially all of the disclosures ordinarily included in a financial statement prepared in accordance with the cash basis of accounting. If the omitted disclosures were included in the financial statement, they might influence the user’s conclusions about the Company’s cash receipts and disbursements. Accordingly, the financial statement is not designed for those who are not informed about such matters.

3. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

4. The financial statement should be titled using a term that does not imply a financial presentation in conformity with GAAP. The financial statement title used in the compilation report should reflect the title used within the body of the financial statement. See section 204 for other examples of statement titles. 5. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the organization. 6. The report should be dated as of the completion of the accountant’s compilation procedures.

Appendix 7A-1 7-44 OFS 8/14

APPENDIX 7A-2

Compilation—Statement of Cash Receipts and Disbursements Only (Nonprofit Organization)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Board of Trustees of ABC Organization City, State

I (We) have compiled the accompanying statement of cash receipts and disbursements of ABC Organization (a nonprofit organization) for the year ended June 30, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the cash basis of accounting.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. If the financial statements omit substantially all disclosures, the accountant may choose to add the following phrase describing the OCBOA to the last sentence of the first paragraph of this report:

, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The following paragraph also would be added to the report:

Appendix 7A-2 OFS 8/14 7-45

5. When the entity is a nonprofit organization, normally the report should be addressed to the board of trustees and/or management.

6. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the organization.

7. The report should be dated as of the completion of the accountant’s compilation procedures.

Appendix 7A-2 (Continued) 7-46 OFS 8/14

APPENDIX 7A-3

Compilation—Standard Report on Cash Basis Financial Statements (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT To Management XYZ Company City, State I (We) have compiled the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. This report assumes that a combined statement of revenues, expenses, and retained earnings is presented. If a separate statement of retained earnings is presented, the wording of the first paragraph should be changed to reflect the proper statement title, “statements of revenues and expenses—cash basis and retained earnings—cashbasis....”

3. If the financial statements omit substantially all disclosures, the following paragraph should be added to this report:

Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared in accordance with the cash basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s assets, liabilities, equity, revenues, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters. See the discussion on reporting on OCBOA financial statements that omit substantially all disclosures in section 701. If the accountant believes it would be helpful to emphasize that the financial statements are not GAAP, a phrase such as “which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America” could be added at the end of the introductory paragraph. Appendix 7A-10 provides an illustrative report for a compilation of a financial statement that omits substantially all disclosures.

4. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

Appendix 7A-3 OFS 8/14 7-47

5. Normally, all reports are addressed to management as many small entities do not have boards of directors and/or stockholders. Management may, or may not, include the owners of the entity.

6. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the entity.

7. The report should be dated as of the completion of the accountant’s compilation procedures.

8. The financial statements should be titled using terms that do not imply financial presentations in conformity with GAAP. Financial statement titles used in the compilation report should reflect the titles used within the body of the financial statements. See the discussion in section 204 for other examples of statement titles.

9. The illustrative report assumes a statement of cash flows is not presented. OCBOA presentations may, but are not required to, include a statement of cash flows.

10. The basis of accounting may be referred to as “modified cash basis,” as discussed in section 400.

Appendix 7A-3 (Continued) 7-48 OFS 8/14

APPENDIX 7A-4

Compilation—Cash Basis (Limited Liability Company)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Members XYZ Company, LLC City, State

I (We) have compiled the accompanying statement of assets, liabilities, and members’ equity—cash basis of XYZ Company, LLC as of December 31, 20XX, and the related statement of revenues, expenses, and members’ equity—cash basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—This report is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. Most state LLC laws require that the company’s name include a designation of its legal status. Examples of such required designations include “Limited Liability Company,” “LLC,” “Limited Company,” and “LC.”

3. When the entity is an LLC, normally the report should be addressed to the Members or the Managing Members.

4. See also Notes 2–4 and 6–10 at Appendix 7A-3.

Appendix 7A-4 OFS 8/14 7-49

APPENDIX 7A-5

Compilation—Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting.

As disclosed in Note C to the financial statements, under the cash basis of accounting, revenues are not accrued. Management has informed me (us) that the Company accrued certain revenues totalling $50,000. If the revenues were not accrued, receivables of $50,000 would not be recorded and shareholders’ equity would be decreased by $32,000 as of December 31, 20XX, and net income would be decreased by $32,000 for the year then ended.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. If the accountant believes that modification of his standard report is not adequate to indicate the deficiencies in the financial statements taken as a whole, he should withdraw from the compilation engagement and provide no further services with respect to those financial statements. The accountant may wish to consult with his legal counsel in these circumstances [SSARS No. 19 (AR 80.29)].

3. The accountant should also be aware of the optional paragraph that may be included when there are pervasivedepartures.SeeNote3atAppendix7A-6.

4. See also the Notes at Appendix 7A-3.

Appendix 7A-5 7-50 OFS 8/14

APPENDIX 7A-6

Compilation—Cash Basis, Departure from the Cash Basis (Land Recorded at Appraised Value), Impact of the Departure Not Determined (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

As disclosed in Note C to the financial statements, the capitalization of property, plant, and equipment and the recording of depreciation over the estimated useful lives of such assets is a generally accepted modification of the cash basis of accounting. Management has informed me (us), however, that the Company has stated land at appraised value in the accompanying financial statements, which is not considered a generally accepted modification of the cash basis of accounting. The effect of this departure on the financial statements has not been determined.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. See the Notes at Appendix 7A-3 and Note 2 at Appendix 7A-5.

3. The following paragraph is optional according to Interpretation No. 1 of AR 80 (AR 9080.01–.04).

Because the significance and pervasiveness of the matter previously discussed makes it difficult to assess its impact on the financial statements as a whole, users of these financial statements should recognize that they might reach different conclusions about the Company’s assets, liabilities, equity, revenues, and expenses if they had access to revised financial statements prepared in conformity with accepted modifications of the cash basis of accounting.

Appendix 7A-6 OFS 8/14 7-51

APPENDIX 7A-7

Compilation—Cash Basis, Supplementary Information Compiled (Limited Liability Company)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Members XYZ Company, LLC City, State

I (We) have compiled the accompanying statement of assets, liabilities, and member’s equity—cash basis of XYZ Company, LLC as of December 31, 20XX, and the related statement of revenues, expenses, and members’ equity—cash basis for the year ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting.

The supplementary information contained in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information has been compiled from information that is the representation of management. I (We) have not audited or reviewed the supplementary information and, accordingly, do not express an opinion or provide any assurance on such supplementary information.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of paragraph 3.41 of the AICPA CAR Guide and AR 80.53.

2. Each schedule of supplementary information should be headed such as the following:

XYZ COMPANY, LLC SCHEDULE I—ANALYSIS OF COST OF SALES—CASH BASIS Year Ended December 31, 20XX 3. The accountants may prefer to present a standard compilation report on the basic financial statements and issue a separate report discussing the level of service on the supplementary information. An example of a separate report follows:

My (Our) report on my (our) compilation of the basic financial statements of XYZ Company, LLC for 20XX appears on page XX. The supplementary information included in the accompanying Sched- ules I and II is presented for purposes of additional analysis and is not a required part of the basic

Appendix 7A-7 7-52 OFS 8/14

financial statements. The supplementary information has been compiled from information that is the representation of management. I (We) have not audited or reviewed the supplementary information and, accordingly, do not express an opinion or provide any assurance on such supplementary information. 4. A reference to the accountant’s compilation report should be made on each page of the financial statements and the supplementary schedules such as—See accountant’s compilation report.

5. See Notes 2–4 and 6–10 at Appendix 7A-3 and Notes 2 and 3 at Appendix 7A-4.

Appendix 7A-7 (Continued) OFS 8/14 7-53

APPENDIX 7A-8

Compilation—Cash Basis, Lack of Independence (S Corporation)

ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I am (We are) not independent with respect to XYZ Company.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is based on SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. Only a compilation report can be issued (not a review) when the accountant is not independent [SSARS No. 19 (AR 90.02)].

3. SSARS No. 19 (AR 80.21) allows the accountant to disclose a description about the reason(s) that his or her independence is impaired. If the accountant chooses to disclose such a description, the accountant should ensure that all of the reasons for not being independent are included in the description. There is no prescribed language for the optional disclosure. Depending on the facts and circumstances of the engagement, the length and wording of the disclosure may vary significantly. See the discussion of the optional disclosure at section 701. An example of the last paragraph is:

We are not independent with respect to XYZ Company as of and for the year ended December 31, 20XX, because the spouse of a partner in our firm is employed by XYZ Company.

4. See the Independence Rule and related Interpretations of the revised AICPA’s Code of Professional Conduct at ET 1.200.001 (formerly ET 101). (See the discussion of the revised Code in section 100.)

5. See also the Notes at Appendix 7A-3.

Appendix 7A-8 7-54 OFS 8/14

APPENDIX 7A-9

Compilation—Cash Basis Statement of Assets, Liabilities, and Equity Only (Proprietorship)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

Mr. John Doe XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (a proprietorship) as of December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the cash basis of accounting.

Theownerisresponsibleforthepreparation and fair presentation of the financial statement in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statement.

My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist the owner in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statement.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. The presentation of a single financial statement also requires appropriate note disclosures. If notes are omitted, see Appendix 7A-10.

3. See also Notes 2, 4, and 6–10 at Appendix 7A-3.

Appendix 7A-9 OFS 8/14 7-55

APPENDIX 7A-10

Compilation—Cash Basis Statement of Assets, Liabilities, and Equity Only, Substantially All Disclosures Omitted (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the cash basis of accounting.

Management is responsible for the preparation and fair presentation of the financial statement in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statement.

Management has elected to omit substantially all of the disclosures ordinarily included in a financial statement prepared in accordance with the cash basis of accounting. If the omitted disclosures were included in the financial statement, they might influence the user’s conclusions about the Company’s assets, liabilities, and equity. Accordingly, this financial statement is not designed for those who are not informed about such matters.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. As discussed in section 301, the authors recommend considering whether readers of the financial statement will be misled by the omission of information that would be provided by the inclusion of the other financial statements.

3. See also Notes 4–10 at Appendix 7A-3.

Appendix 7A-10 7-56 OFS 8/14

APPENDIX 7A-11

Compilation—Cash Basis Statement of Revenues and Expenses and Retained Earnings Only (C Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of revenues, expenses, and retained earnings—cash basis of XYZ Company (a corporation) for the year ended December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the cash basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. The presentation of a single financial statement also requires appropriate note disclosures. If notes are omitted, see Appendix 7A-10.

3. The example illustrated above is a report on an entity’s results of operations. However, the term income statement should not be used for OCBOA statements. Rather, a term such as “statement of revenues, expenses, retained earnings—cash basis” should be used. See section 204 for a discussion of appropriate titles.

4. See also the Notes at Appendix 7A-3.

Appendix 7A-11 OFS 8/14 7-57

APPENDIX 7A-12

Compilation—Cash Basis, Prescribed Form (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company, Inc. City, State

I (We) have compiled the statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended included in the accompanying prescribed form. I (We) have not audited or reviewed the financial statements included in the accompanying prescribed form and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the form prescribed by the Texas Department of Highways.

Management is responsible for the preparation and fair presentation of the financial statements included in the form prescribed by the TexasDepartment of Highways and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

The financial statements included in the accompanying prescribed form are presented in accordance with the requirements of the Texas Department of Highways and are not intended to be a presentation in accordance with the cash basis of accounting.

This report is intended solely for the information and use of the Texas Department of Highways and is not intended to be and should not be used by anyone other than this specified party.

Firm’s Signature

Report Date

Notes:

1. Authority—This report is an adaptation of SSARS No. 3 (AR 300) and AR 80.17.

2. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

Appendix 7A-12 7-58 OFS 8/14

APPENDIX 7A-13

Compilation—Standard Report on Cash Basis Financial Statements (Nonprofit Organization)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Board of Trustees of ABC Organization City, State

I (We) have compiled the accompanying statement of assets, liabilities, and net assets—cash basis of ABC Organization (a nonprofit organization) as of December 31, 20XX, and the related statement of revenues, expenses, and other changes in net assets—cash basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the cash basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

3. The basis of accounting is usually disclosed in a note to the financial statements. The first and second paragraphs to the accountant’s compilation report above indicate that the financial statements are prepared on the cash basis of accounting. The example report included at SSARS No. 19, Compilation Exhibit B (AR 80.64) does not include language emphasizing that the basis of accounting used is not GAAP.However, if the accountant believes it would be helpful to emphasize that fact, a phrase such as “which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America” could be added after the name of the other comprehensive basis of accounting in the introductory paragraph.

4. When the entity is a nonprofit organization, normally the report should be addressed to the board of trustees and/or management.

5. The terms balance sheet, income statement, etc., should not be used to describe statements prepared on an other comprehensive basis of accounting. See the discussion in section 204 for other examples of appropriate statement titles.

6. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the organization in the first paragraph of the report.

Appendix 7A-13 OFS 8/14 7-59

7. The report should be dated as of the completion of the accountant’s work [SSARS No. 19 (AR 80.17g)].

8. Financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure. See AU-C 800.15–.17, .A19–.A23, and .A34, SSARS No. 19 (AR 80.19), and Chapter 3 for considering the adequacy of disclosure. See Appendix 7A-14 if notes are omitted.

9. Each financial statement should have a reference to the accountant’s compilation report on each page [SSARS No. 19 (AR 80.18)], as discussed in section 204.

10. Statements prepared on an OCBOA do not require a statement of cash flows to be presented. See section 204.

Appendix 7A-13 (Continued) 7-60 OFS 8/14

APPENDIX 7A-14

Compilation—Cash Basis, Substantially All Disclosures Omitted (Nonprofit Organization)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Board of Trustees of ABC Organization City, State

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. Selected notes to the financial statements, if presented, should be labeled such as follows:

ABC ORGANIZATION SELECTED INFORMATION—Substantially All Disclosures Required by the Cash Basis of Accounting Are Not Included December 31, 20XX See SSARS No. 19 (AR 80.20) and section 307.

3. SSARS No. 19 (AR 80.20) prohibits using the general caveat illustrated in the fourth paragraph above if the omission of substantially all disclosures is intended to mislead financial statement users. In that situation, the authors recommend that the accountant request the organization to include the required disclosures. If the organization refuses, the accountant can either modify the compilation report to address all of the material disclosures omitted or withdraw from the engagement.

4. See also the Notes at Appendix 7A-13.

Appendix 7A-14 OFS 8/14 7-63

APPENDIX 7B-1

Compilation—Standard Report on Income Tax Basis Financial Statements (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. As discussed in section 303, the financial statements should include a summary of significant accounting policies that includes a description of the OCBOA and a description of the differences between the OCBOA and GAAP. (It is not necessary to quantify the differences.) If the basis of accounting is not disclosed in the financial statements, the accountant may choose to add a phrase such as “, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America” to the end of the introductory paragraph.

3. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

4. Normally, all reports are addressed to management, as many small entities do not have boards of directors and/or stockholders. Management may, or may not, include the owners of the entity.

5. The terms balance sheet, income statement, etc., should not be used to describe statements prepared on an other comprehensive basis of accounting. See section 204 for other examples of appropriate statement titles.

6. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the company in the first paragraph of the report.

Appendix 7B-1 7-64 OFS 8/14

7. The report should be dated as of the completion of the accountant’s work [SSARS No. 19 (AR 80.17g)].

8. Financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure. See Chapter 3 for considering the adequacy of disclosure. See Appendix 7B-2 if notes are omitted.

9. Each financial statement should have a reference to the accountant’s compilation report on each page [SSARS No. 19 (AR 80.18)]. See the discussion in section 204.

10. Statements prepared on an OCBOA are not required to present a statement of cash flows. See section 204. If, however, a statement of cash flows is presented, the first paragraph of the report would be revised to refer to the statement. The illustrative report and financial statements included at Appendix 5G provides an example of a compilation report that includes a statement of cash flows. The illustrative report at Appendix 7B-17 also includes reference to a statement of cash flows.

11. This report is appropriate if a combined statement of revenues, expenses, and retained earnings—income tax basis is presented. If the statement of retained earnings (or statement of changes in shareholders’ equity) is presented separately, the first paragraph would be modified as follows:

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statements of revenues and expenses—income tax basis and retained earnings (changes in shareholders’ equity)—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Appendix 7B-1 (Continued) OFS 8/14 7-65

APPENDIX 7B-2

Compilation—Income Tax Basis, Substantially All Disclosures Omitted (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared in accordance with the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s assets, liabilities, equity, revenues, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is based on SSARS No. 19, Compilation Exhibit B (AR 80.64). 2. Selected notes to the financial statements, if presented, should be labeled as follows [SSARS No. 19 (AR 80.20)]: XYZ COMPANY SELECTED INFORMATION—Substantially All Disclosures Required by the Income Tax Basis of Accounting Are Not Included December 31, 20XX See section 307. 3. SSARS No. 19 (AR 80.20) states that the accountant may compile financial statements that omit substantially all disclosures provided the omission is not, to his or her knowledge, undertaken to mislead a user of the financial statements. If the accountant knows or suspects that the disclosures have been omitted with the intention to mislead, the authors recommend that the accountant consider whether to require disclosure or withdraw from the engagement. 4. See also the Notes at Appendix 7B-1. Note 2 to Appendix 7B-1 discusses optional language that may be used when the basis of accounting is not disclosed in the financial statements.

Appendix 7B-2 7-66 OFS 8/14

APPENDIX 7B-3

Compilation—Income Tax Basis, Substantially All Disclosures Omitted, Departure from the Tax Basis (Omission of Income Tax Provision), Impact of the Departure Not Determined (C Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. During my (our) compilation, I (we) did become aware of a departure from the income tax basis of accounting that is described in the following paragraph. The income tax basis of accounting requires that the Company record a federal income tax provision. Management has informed me (us) that the Company has not recorded such a provision. The effect of this departure on the financial statements has not been determined. Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared in accordance with the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s assets, liabilities, equity, revenues, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters.

Firm’s Signature

Report Date

Notes: 1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64). 2. The following is optional language that may be added when OCBOA departures are pervasive according to Interpretation No. 1 of AR 80 (AR 9080.01–.04). Because the significance and pervasiveness of the matter previously discussed makes it difficult to assess its impact on the financial statements as a whole, users of these financial statements should recognize that they might reach different conclusions about the Company’s assets, liabilities, equity, revenues, and expenses if they had access to revised financial statements prepared in conformity with the income tax basis of accounting. 3. See also the Notes at Appendixes 7B-1 and 7B-2. Note 2 to Appendix 7B-1 discusses optional language that may be used when the basis of accounting is not disclosed in the financial statements.

Appendix 7B-3 OFS 8/14 7-67

APPENDIX 7B-4

Compilation—Income Tax Basis, Supplementary Information Compiled (Partnership)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Partners XYZ Ltd. City, State

I (We) have compiled the accompanying statement of assets, liabilities, and partners’ capital—income tax basis of XYZ Ltd. (a partnership) as of December 31, 20XX, and the related statement of revenues, expenses, and changes in partners’ capital—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of paragraph 3.41 of the AICPA CAR Guide and AR 80.53.

2. Each schedule of supplementary information should be headed such as the following:

XYZ LTD. SCHEDULE I—ANALYSIS OF COST OF SALES—INCOME TAX BASIS Year Ended December 31, 20XX 3. A reference to the accountant’s report should be made on each page of the supplementary schedules such as—

See accountant’s report. 4. Appendix 7B-5 presents an alternative approach to reporting on compiled supplementary information.

5. See also the Notes at Appendix 7B-1.

Appendix 7B-4 7-68 OFS 8/14

APPENDIX 7B-5

Compilation—Income Tax Basis, Separate Report on Supplementary Information (Partnership)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT ON SUPPLEMENTARY INFORMATION

To the Partners XYZ Ltd. City, State

My (Our) report on my (our) compilation of the basic financial statements of XYZ Ltd. for 20XX appears on page XX. The supplementary information included in the accompanying Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information has been compiled from information that is the representation of management. I (We) have not audited or reviewed the supplementary information and, accordingly, I (we) do not express an opinion or provide any assurance on such supplementary information.

Firm’s Signature

Report Date

Notes:

1. The illustrated report is based on the report presented in paragraph 3.41 of the AICPA CAR Guide and AR 80.53. Section 701 also provides a discussion concerning reporting on compiled supplementary information.

2. Each schedule of supplementary information should be headed such as the following:

XYZ LTD. SCHEDULE I—ANALYSIS OF COST OF SALES—INCOME TAX BASIS Year Ended December 31, 20XX 3. This report should be placed on the page immediately preceding the supplementary information.

4. SeealsoNotes3and7atAppendix7B-1.

Appendix 7B-5 OFS 8/14 7-69

APPENDIX 7B-6

Compilation—Income Tax Basis, Lack of Independence (C Corporation)

ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

I am (We are) not independent with respect to XYZ Company.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is based on SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. Only a compilation report can be issued (not a review) when the accountant is not independent [SSARS No. 19 (AR 90.02)].

3. SSARS No. 19 (AR 80.21) allows the accountant to disclose a description about the reason(s) that his or her independence is impaired, if the accountant so desires. If the accountant chooses to disclose such a description, the accountant should ensure that all of the reasons for not being independent are included in the description. There is no prescribed language for the optional disclosure. Depending on the facts and circumstances of the engagement, the length and wording of the disclosure may vary significantly. See the discussion of the optional disclosure at section 701. An example of the last paragraph is:

We are not independent with respect to XYZ Company as of and for the year ended December 31, 20XX, because the spouse of a partner in our firm is employed by XYZ Company.

5. See also the Notes at Appendix 7B-1.

Appendix 7B-6 7-70 OFS 8/14

APPENDIX 7B-7

Compilation—Income Tax Basis Statement of Assets, Liabilities, and Partners’ Capital Only (Partnership)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Partners XYZ Ltd. City, State

I (We) have compiled the accompanying statement of assets, liabilities, and partners’ capital—income tax basis of XYZ Ltd. (a partnership) as of December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the income tax basis of accounting.

Management is responsible for the preparation and fair presentation of the financial statement in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statement.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. The presentation of a single financial statement also requires appropriate note disclosures. If notes are omitted, see Appendix 7B-8.

3. See also the Notes at Appendix 7B-1.

Appendix 7B-7 OFS 8/14 7-71

APPENDIX 7B-8

Compilation—Income Tax Basis Statement of Assets, Liabilities, and Equity Only, Substantially All Disclosures Omitted (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or provide any assurance about whether the financial statement is in accordance with the income tax basis of accounting.

Management has elected to omit substantially all of the disclosures ordinarily included in a financial statement prepared in accordance with the income tax basis of accounting. If the omitted disclosures were included in the financial statement, they might influence the user’s conclusions about the Company’s assets, liabilities, and equity. Accordingly, this financial statement is not designed for those who are not informed about such matters.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. If the entity experienced a large loss in the period ending on the date of the statement of assets, liabilities, and equity, many firms believe that the excess should be disclosed in a note or in the equity section of the statement. If the client omits such disclosure, the accountant should carefully consider the guidance in SSARS No. 19 (AR 80.20):

The accountant may compile such financial statements, provided that the omission of substantially all disclosures is not, to his or her knowledge, undertaken with the intention of misleading those who might reasonably be expected to use such financial statements. 3. See also the Notes at Appendixes 7B-1 and 7B-2. Note 2 to Appendix 7B-1 discusses optional language that may be used when the basis of accounting is not disclosed in the financial statements.

Appendix 7B-8 7-72 OFS 8/14

APPENDIX 7B-9

Compilation—Income Tax Basis, Prescribed Form (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended included in the accompanying prescribed form. I (We) have not audited or reviewed the financial statements included in the accompanying prescribed form and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the form prescribed by the Texas Department of Highways.

This report is intended solely for the information and use of management of XYZ Company and the Texas Department of Highways and is not intended to be and should not be used by anyone other than these specified parties.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 3 (AR 300) and AR 80.17. Section 703 provides a discussion concerning reporting on financial information presented in prescribed forms or schedules.

2. See also the Notes at Appendix 7B-1.

Appendix 7B-9 OFS 8/14 7-73

APPENDIX 7B-10

Compilation—Comparative Income Tax Basis Financial Statements, Each Period Compiled by Continuing Accountant (Partnership)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Partners XYZ Ltd. City, State

I (We) have compiled the accompanying statements of assets, liabilities, and partners’ capital—income tax basis of XYZ Ltd. (a partnership) as of December 31, 20X2 and 20X1, and the related statements of revenues, expenses, and changes in partners’ capital—income tax basis for the years then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

My (Our) responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64) and SSARS No. 2, Exhibit A (AR 200.38).

2. The financial statements should be appropriately headed such as—

XYZ LTD. STATEMENTS OF ASSETS, LIABILITIES, AND PARTNERS’ CAPITAL—INCOME TAX BASIS December 31, 20X2 and 20X1 3. FASB ASC 205-10-45-2 recommends, but does not require, presentation of comparative financial statements. Also, notes to comparative statements that discuss both years shall be presented to the extent they are relevant.

4. See also the Notes at Appendix 7B-1.

Appendix 7B-10 7-74 OFS 8/14

APPENDIX 7B-11

Compilation—Standard Report on Income Tax Basis Financial Statements (Limited Liability Company)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To the Members XYZ Company, LLC City, State

I (We) have compiled the accompanying statement of assets, liabilities, and members’ equity—income tax basis of XYZ Company, LLC as of December 31, 20XX, and the related statement of revenues, expenses, and members’ equity—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—This report is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. See also the Notes at Appendix 7B-1.

3. If the financial statements omit substantially all disclosures, the following paragraph should be added to this report:

Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared in accordance with the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s assets, liabilities, equity, revenues, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters. If the accountant believes it would be helpful to emphasize that the financial statements are not GAAP,a phrase such as “which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America” could be added at the end of the introductory paragraph.

Appendix 7B-11 OFS 8/14 7-75

APPENDIX 7B-12

Compilation—Income Tax Basis, Reporting on the First Year of Operations (C Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statements of revenues and expenses—income tax basis and changes in stockholders’ equity—income tax basis for the period from inception (May 8, 20XX) to December 31, 20XX. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

3. The first paragraph indicates that the statements of revenue and expenses and changes in stockholders’ equity are for the initial period, i.e., “for the period from inception (May 8, 20XX) to December 31, 20XX.”

4. The financial statements would normally include a statement of stockholders’ equity—income tax basis rather than a statement of retained earnings—income tax basis because in the initial period there would be changes in components of stockholders’ equity other than retained earnings.

Appendix 7B-12 7-76 OFS 8/14

APPENDIX 7B-13

Compilation—Comparative Income Tax Basis Statements—Both Years Compiled; However, Prior Year by a Different Accountant (Predecessor’s Report Not Presented) (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20X2, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting. The 20X1 financial statements of XYZ Company were compiled by other accountants, whose report dated February 1, 20X2, stated that they have not audited or reviewed the 20X1 financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

My (Our) responsibility is to conduct the 20X2 compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 2 (AR 200.17 and AR 200.38).

2. See Notes to Appendixes 7B-1 and 7B-10.

Appendix 7B-13 OFS 8/14 7-77

APPENDIX 7B-14

Compilation—Comparative Income Tax Basis Statements—Compilation Report on Prior Year’s Financial Statements That Previously Did Not Omit Substantially All Disclosures (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statements of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20X2, and 20X1, and the related statements of revenues, expenses, and retained earnings—income tax basis for the years then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Management has elected to omit substantially all of the disclosures required by the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s assets, liabilities, equity, revenues, and expenses. Accordingly, these financial statements are not designed for those who are not informed about such matters.

The 20X1 financial statements were compiled by me (us) from financial statements that did not omit substantially all of the disclosures required by the income tax basis of accounting and that I (we) previously compiled (reviewed) (audited) as indicated in my (our) report dated March 1, 20X2.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 2 (AR 200.30–.31 and AR 200.38) and Interpretation No. 1 of SSARS No. 2 (AR 9200.01–.04), Reporting on Financial Statements that Previously Did Not Omit Substantially All Disclosures.

2. See Notes to Appendixes 7B-1 and 7B-2.

Appendix 7B-14 7-78 OFS 8/14

APPENDIX 7B-15

Compilation—Income Tax Basis, Statement of Revenues, Expenses, and Retained Earnings Accompanied by Expired Budget Information (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenue, expenses, and retained earnings—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

The supplementary budget information—income tax basis is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary budget information has been compiled from information that is the representation of management. I (We) have not audited or reviewed the supplementary budget information and, accordingly, do not express an opinion or provide any assurance on such supplementary budget information.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. This report is appropriate when expired budgeted information is presented alongside a historical income statement (for example, a columnar presentation of “actual vs. budget”) and the accountant has compiled both. If the historical income statement is accompanied by unexpired budget information, such information is considered prospective in nature and the accountant must report on it separately. Chapter 14 of PPC’s Guide to Compilation and Review Engagements discusses providing services and reporting on prospective information.

3. Each column of the presentation should be clearly marked (e.g., “Historical” and “Budgeted”).

Appendix 7B-15 OFS 8/14 7-79

4. The financial statements should be appropriately headed such as:

XYZ COMPANY STATEMENTS OF REVENUE AND EXPENSES—INCOME TAX BASIS—HISTORICAL AND BUDGETED December 31, 20XX Disclosure in the column headings could be as follows:

Historical Budgeted

Sales $ X,XXX $ X,XXX

5. Although accountants usually may choose to issue a separate report on supplementary information, the authors do not recommend that alternative in this situation since the historical and supplemental information is presented side by side.

6. SeealsotheNotestoAppendix7B-1.

Appendix 7B-15 (Continued) 7-80 OFS 8/14

APPENDIX 7B-16

Compilation—Income Tax Basis, a Specified Element, Account, or Item of a Financial Statement (Separate Schedule of Sales)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying schedule of sales—income tax basis of XYZ Company (a corporation) for the year ended December 31, 20XX. I (We) have not audited or reviewed the accompanying schedule of sales and, accordingly, do not express an opinion or provide any assurance about whether the schedule of sales is in accordance with the income tax basis of accounting.

Management is responsible for the preparation and fair presentation of the schedule of sales in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the schedule of sales.

My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of a schedule of sales—income tax basis without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the schedule of sales—income tax basis.

Firm’s Signature

Report Date

Notes:

1. Authority—SSARS No. 13 (AR 110.17).

2. AR 110.11a states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

3. Normally, all reports are addressed to management, as many small entities do not have boards of directors and/or stockholders. Management may, or may not, include the owners of the entity.

4. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the company.

5. The report should be dated as of the completion of the accountant’s work. (See section 701.)

6. The accountant is not precluded from issuing a compilation report on one or more specified elements, accounts, or items of a financial statement for an entity with respect to which the accountant is not independent. If the accountant is not independent, he or she should disclose the lack of independence. When the accountant is not independent, the following should be included as the last paragraph of the report:

I am (We are) not independent with respect to XYZ Company. AR 110.14 allows the accountant to disclose a description about the reason(s) that his or her independence is impaired, if the accountant so desires. If the accountant chooses to disclose such a description, the

Appendix 7B-16 OFS 8/14 7-81

accountant should ensure that all of the reasons for not being independent are included in the description. There is no prescribed language for the optional disclosure. Depending on the facts and circumstances of the engagement, the length and wording of the disclosure may vary significantly. See the discussion of the optional disclosure in section 701. An example of the last paragraph with the optional disclosure is:

I am (We are) not independent with respect to XYZ Company as of and for the year ended December 31, 20XX, because the spouse of a partner in our firm is employed by XYZ Company. 7. The bottom of each page of the compiled specified elements, accounts, or items of a financial statement should include a reference to the accountant’s report.

Appendix 7B-16 (Continued) 7-82 OFS 8/14

APPENDIX 7B-17

Compilation—Income Tax Basis, Including Cash Flow Statement, Substantially All Disclosures Omitted (S Corporation)

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

To Management XYZ Company City, State

I (We) have compiled the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, the related statements of revenues, expenses, and retained earnings—income tax basis, and cash flows—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. Statements prepared on an OCBOA are not required to present a statement of cash flows. See section 204. If, however, a statement of cash flows is presented (as presented in this report), all references to the financial statements in the report would include the statement of cash flows.

3. Selected notes to the financial statements, if presented, should be labeled as follows [SSARS No. 19 (AR 80.20)]:

XYZ COMPANY SELECTED INFORMATION—Substantially All Disclosures Required by the Income Tax Basis of Accounting Are Not Included December 31, 20XX See section 307.

Appendix 7B-17 OFS 8/14 7-83

4. SSARS No. 19 (AR 80.20) states that the accountant may compile financial statements that omit substantially all disclosures provided the omission is not, to his or her knowledge, undertaken to mislead a user of the financial statements. If the accountant knows or suspects that the disclosures have been omitted with the intention to mislead, the authors recommend that the accountant consider whether to require disclosure or withdraw from the engagement.

5. See also Notes 2–9 and 11 at Appendix 7B-1. Note 2 to Appendix 7B-1 discusses optional language that may be used when the basis of accounting is not disclosed in the financial statements.

Appendix 7B-17 (Continued) OFS 8/14 7-87

APPENDIX 7C-1

Review—Statement of Cash Receipts and Disbursements Only (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of cash receipts and disbursements of XYZ Company (an S corporation) for the year ended December 31, 20XX. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statement as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statement. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the accompanying financial statement in order for it to be in conformity with the cash basis of accounting, as described in Note A.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Review Exhibit D (AR 90.73).

2. The financial statement should disclose the basis of accounting and describe the primary differences from GAAP.In addition, the statement of cash receipts and disbursements should include all other notes necessary for adequate disclosure.

3. The financial statement should be titled using a term that does not imply a financial presentation in conformity with GAAP.The financial statement title used in the review report should reflect the title used within the body of the financial statement.

4. See the Notes at Appendix 7C-2.

Appendix 7C-1 7-88 OFS 8/14

APPENDIX 7C-2

Review—Standard Report on Cash Basis Financial Statements (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the cash basis of accounting, as described in Note A.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is based on SSARS No. 19, Review Exhibit D (AR 90.73).

2. SSARS No. 19 (AR 90.28a) states that the accountant’s report should have a title and that title should include the word “Independent.”

3. Normally, all reports are addressed to management, as many small entities do not have boards of directors and/or stockholders. Management may, or may not, include the owners of the entity.

4. The terms balance sheet, income statement, etc., should not be used to describe statements prepared on an other comprehensive basis of accounting. See section 204 for other examples of appropriate statement titles.

5. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the company in the first paragraph of the report.

6. The report should be dated as of the completion of the accountant’s review procedures [SSARS No. 19 (AR 90.28h)]. SSARS No. 19 requires accountants to obtain representation letters in all review engagements. Section 905 discusses representation letters and their dating.

Appendix 7C-2 OFS 8/14 7-89

7. Financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure. See Chapter 3 for a discussion of disclosures in OCBOA presentations. A review report cannot be issued if disclosures have been omitted.

8. Each financial statement should have a reference to the accountant’s review report on each page [SSARS No. 19 (AR 90.29)]. Referencing the accountant’s report is discussed in section 204.

9. A review report cannot be issued when the accountant is not independent [SSARS No. 19 (AR 90.02)].

10. Statements prepared on an OCBOA do not require a statement of cash flows to be presented. See section 204.

11. This report is appropriate if a combined statement of revenues, expenses, and retained earnings—cash basis is presented. If the statement of retained earnings (or statement of changes in stockholders’ equity) is presented separately, the first paragraph would be modified as follows:

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statements of revenues and expenses—cash basis and retained earnings (changes in stockholders’ equity)—cash basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

Appendix 7C-2 (Continued) 7-90 OFS 8/14

APPENDIX 7C-3

Review—Cash Basis, Departure from the Cash Basis (Accrual of Certain Revenues), Impact of the Departure Is Determined (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Basedonmy(our)review,withtheexceptionofthematterdescribed in the following paragraph, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the cash basis of accounting, as described in Note A.

As disclosed in Note C to the financial statements, under the cash basis of accounting, revenues are not accrued. Management has informed me (us) that the Company accrued certain revenues totaling $50,000. If the revenues were not accrued, receivables of $50,000 would not be recorded and retained earnings would be decreased by $32,000 as of December 31, 20XX, and net income would be decreased by $32,000 for the year then ended.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of paragraph 5.37 of the AICPA CAR Guide and of SSARS No. 19, Review Exhibit D (AR 90.73).

2. If the accountant believes that modification of his standard report is not adequate to indicate the deficiencies in the financial statements taken as a whole, he should withdraw from the review engagement and provide no further services with respect to those financial statements. The accountant may wish to consult with his legal counsel in these circumstances [SSARS No. 19 (AR 90.36)].

3. The accountant should also be aware of the optional paragraph that may be included when there are pervasive departures. See the report in Appendix 7C-4.

4. See also the Notes at Appendix 7C-2.

Appendix 7C-3 OFS 8/14 7-91

APPENDIX 7C-4

Review—Cash Basis, Departure from the Cash Basis (Land Recorded at Appraised Value), Impact of the Departure Not Determined (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

As disclosed in Note C to the financial statements, the capitalization of property, plant, and equipment and the recording of depreciation over the estimated useful lives of such assets is a generally accepted modification of the cash basis of accounting. Management has informed me (us), however, that the Company has stated land at appraised value in the accompanying financial statements, which is not considered a generally accepted modification of the cash basis of accounting. The effect of this departure from the cash basis of accounting on the accompanying financial statements has not been determined.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Review Exhibit D (AR 90.73).

2. See the Notes at Appendix 7C-2 and Note 2 at Appendix 7C-3.

3. The following paragraph is optional according to Interpretation No. 1 of AR 90 (AR 9090.01–.04).

Because the significance and pervasiveness of the matters previously discussed makes it difficult to assess its impact on the financial statements as a whole, users of these financial statements should recognize that they might reach different conclusions about the Company’s assets, liabilities, equity, revenues, and expenses if they had access to revised financial statements prepared in conformity with accepted modifications of the cash basis of accounting.

Appendix 7C-4 7-92 OFS 8/14

APPENDIX 7C-5

Review—Cash Basis, Supplementary Information Covered by Review Procedures (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State I (We) have reviewed the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—cash basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the cash basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report. Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the cash basis of accounting, as described in Note A. My (Our) review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the cash basis of accounting, as described in Note A. The supplementary information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and I (we) did not become aware of any material modifications that should be made to such information.

Firm’s Signature

Report Date

Notes: 1. Authority—The report illustrated above is an adaptation of paragraph 5.37 of the AICPA CAR Guide and AR 90.60. 2. Each supplementary schedule should be headed such as the following: XYZ COMPANY SCHEDULE I—ANALYSIS OF COST OF SALES—CASH BASIS Year Ended December 31, 20XX 3. A reference to the accountant’s review report should be made on the bottom of the financial statements and supplementary information such as— See accountant’s review report. 4. See Appendix 7D-3 for an alternative approach to reporting on reviewed supplementary information. See also the Notes at Appendix 7C-2.

Appendix 7C-5 OFS 8/14 7-93

APPENDIX 7C-6

Review—Cash Basis, Supplementary Information Not Covered by Review Procedures (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

My (Our) review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the cash basis of accounting, as described in Note A. The supplementary information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information has not been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements but has been compiled on the cash basis of accounting from information that is the representation of management. I (We) have not audited or reviewed the supplementary information, and accordingly, I (we) do not express an opinion or provide any assurance on such supplementary information.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of paragraph 5.37 of the AICPA CAR Guide and AR 90.60.

2. See the Notes at Appendix 7C-2, Notes 2 and 3 at Appendix 7C-5, and Note 4 at Appendix 7D-3.

Appendix 7C-6 7-94 OFS 8/14

APPENDIX 7C-7

Review—Cash Basis Statement of Assets, Liabilities, and Equity Only (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—cash basis of XYZ Company (an S corporation) as of December 31, 20XX. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statement as a whole. Accordingly, I (we) do not express such an opinion.

Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the accompanying statement of assets, liabilities, and equity in order for it to be in conformity with the cash basis of accounting, as described in Note A.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Review Exhibit D (AR 90.73) and Relevant Definitions, Financial statements (AR 60.04).

2. The presentation of a single financial statement also requires appropriate note disclosures.

3. See also the Notes at Appendix 7C-2.

Appendix 7C-7 OFS 8/14 7-95

APPENDIX 7C-8

Review—Standard Report on Cash Basis Financial Statements (Nonprofit Organization)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To the Board of Trustees of ABC Organization City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and net assets—cash basis of ABC Organization (a nonprofit organization) as of December 31, 20XX, and the related statement of revenues, expenses, and other changes in net assets—cash basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of Organization management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Review Exhibit D (AR 90.73).

2. SSARS No. 19 (AR 90.28a) states that the accountant’s report should have a title and that title should include the word “Independent.”

3. The financial statements should disclose the basis of accounting. This disclosure might read as follows:

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Organization’s policy is to prepare its financial statements on the cash basis of accounting; consequently, contributions and other revenues are recognized when received rather than when promised or earned, and certain expenses and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. The basis of accounting may be referred to as “modified cash basis.” See the discussion in section 400 concerning modifications that have substantial support.

Appendix 7C-8 7-96 OFS 8/14

4. When the entity is a nonprofit organization, normally the report should be addressed to the board of trustees and/or management.

6. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the organization in the first paragraph of the report.

7. The report should be dated no earlier than the date on which the accountant has accumulated review evidence [SSARS No. 19 (AR 90.28h)].

8. Financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure. See AU-C 800.15–.17, .A19–.A23, and .A34; SSARS No. 19 (AR 90.32); and Chapter 3 for a discussion of disclosures in OCBOA presentations. A review report cannot be issued if disclosures have been omitted.

9. Each financial statement should have a reference to the independent accountant’s review report on each page [SSARS No. 19 (AR 90.29)]. Referencing the accountant’s report is discussed in section 204.

10. A review report cannot be issued when the accountant is not independent [SSARS No. 19 (AR 90.02)].

11. Statements prepared on an OCBOA do not require a statement of cash flows to be presented. See section 204.

Appendix 7C-8 (Continued) OFS 8/14 7-99

APPENDIX 7D-1

Review—Standard Report on Income Tax Basis Financial Statements (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is based on SSARS No. 19, Review Exhibit D (AR 90.73).

2. SSARS No. 19 (AR 90.28a) states that the accountant’s report should have a title and that title should include the word “Independent.”

3. Normally, all reports are addressed to management, as many small entities do not have boards of directors and/or stockholders. Management may, or may not, include the owners of the entity.

5. The authors believe that the type of legal entity, if not obvious from the name, should be disclosed parenthetically after the name of the company in the first paragraph of the report.

Appendix 7D-1 7-100 OFS 8/14

7. Financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure. A review report cannot be issued if disclosures have been omitted. See Chapter 3 for a discussion of disclosures in OCBOA presentations.

8. Each financial statement should have a reference to the accountant’s review report on each page [SSARS No. 19 (AR 90.29)]. Referencing the accountant’s report is discussed in section 204.

9. A review report cannot be issued when the accountant is not independent [SSARS No. 19 (AR 90.02)].

10. Statements prepared on an OCBOA do not require a statement of cash flows to be presented. See section 204. If, however, a statement of cash flows is presented, the first paragraph of the report would be revised to refer to the statement. The illustrative reports and financial statements included at Appendixes 5D and 5F provide examples of review reports that include a statement of cash flows.

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20XX, and the related statements of revenues and expenses—income tax basis and retained earnings (changes in shareholders’ equity)—income tax basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

Appendix 7D-1 (Continued) OFS 8/14 7-101

APPENDIX 7D-2

Review—Income Tax Basis, Supplementary Information Covered by Review Procedures (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State I (We) have reviewed the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report. Based on my (our) review, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the income tax basis of accounting, as described in Note A. My (Our) review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the income tax basis of accounting, as described in Note A. The supplementary information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and I (we) did not become aware of any material modifications that should be made to such information.

Firm’s Signature

Report Date

Notes: 1. Authority—The report illustrated above is an adaptation of paragraph 5.37 of the AICPA CAR Guide and AR 90.60. 2. Each supplementary schedule should be headed such as the following: XYZ COMPANY SCHEDULE I—ANALYSIS OF COST OF SALES—INCOME TAX BASIS Year Ended December 31, 20XX 3. A reference to the accountant’s review report should be made on each page of the financial statement and the supplementary schedules such as— See accountant’s review report. 4. See Appendix 7D-3 for an alternative approach to reporting on reviewed supplementary information. See also the Notes at Appendix 7D-1.

Appendix 7D-2 7-102 OFS 8/14

APPENDIX 7D-3

Review—Income Tax Basis, Separate Report on Supplementary Information Covered by Review Procedures (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT ON SUPPLEMENTARY INFORMATION

To Management XYZ Company City, State

My (Our) report on my (our) review of the basic financial statements of XYZ Company for 20XX appears on page XX. That review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the income tax basis of accounting. The supplementary information included in the accompanying Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information is presented on the income tax basis of accounting. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and I (we) did not become aware of any material modifications that should be made to such information.

Firm’s Signature

Report Date

Notes:

1. The illustrated report is an adaptation of paragraph 5.37 of the AICPA CAR Guide and AR 90.60.

2. Each supplementary schedule should be headed such as the following:

XYZ COMPANY SCHEDULE I—ANALYSIS OF COST OF SALES—INCOME TAX BASIS Year Ended December 31, 20XX 3. This report should be placed on the page immediately preceding the supplementary information.

4. The date of this report should be the same as the date of the review report on the basic financial statements.

5. See also the Notes at Appendix 7D-1.

Appendix 7D-3 OFS 8/14 7-103

APPENDIX 7D-4

Review—Income Tax Basis, Supplementary Information Not Covered by Review Procedures (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

My (Our) review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the income tax basis of accounting, as described in Note A. The supplementary information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information has not been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements but has been compiled on the income tax basis of accounting from information that is the representation of management. I (We) have not audited or reviewed the supplementary information, and accordingly, I (we) do not express an opinion or provide any assurance on such supplementary information.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of paragraph 5.37 of the AICPA CAR Guide and AR 90.60.

2. See Appendix 7D-3 for an alternative approach to reporting on reviewed supplementary information.

3. See also the Notes at Appendix 7D-1 and Notes 2 and 3 at Appendix 7D-2.

Appendix 7D-4 7-104 OFS 8/14

APPENDIX 7D-5

Review—Income Tax Basis Statement of Assets, Liabilities, and Equity Only (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liabilities, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statement as a whole. Accordingly, I (we) do not express such an opinion.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 19, Review Exhibit D (AR 90.73) and Relevant Definitions, Financial statements (AR 60.04).

2. The presentation of a single financial statement also requires appropriate note disclosures.

3. See also the Notes at Appendix 7D-1.

Appendix 7D-5 OFS 8/14 7-105

APPENDIX 7D-6

Review—Comparative Income Tax Basis Financial Statements, Each Period Reviewed by Continuing Accountant (S Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statements of assets, liabilities, and equity—income tax basis of XYZ Company (an S corporation) as of December 31, 20X2 and 20X1, and the related statements of revenues, expenses, and retained earnings—income tax basis for the years then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Based on my (our) reviews, I am (we are) not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the income tax basis of accounting, as described in Note A.

Firm’s Signature

Report Date

Notes:

1. Authority—The report illustrated above is an adaptation of SSARS No. 2 (AR 200.39).

2. The financial statements should be appropriately headed such as—

XYZ COMPANY STATEMENTS OF ASSETS, LIABILITIES, AND EQUITY—INCOME TAX BASIS December 31, 20X2 and 20X1 3. FASB ASC 205-10-45-2 recommends, but does not require, presentation of comparative financial statements. Also, notes to comparative statements that discuss both years shall be presented to the extent they are relevant.

4. See also the Notes at Appendix 7D-1.

Appendix 7D-6 7-106 OFS 8/14

APPENDIX 7D-7

Review—Income Tax Basis, Major Uncertainty, Ability to Continue as a Going Concern in Question (C Corporation)

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To Management XYZ Company City, State

I (We) have reviewed the accompanying statement of assets, liability, and equity—income tax basis of XYZ Company (a corporation) as of December 31, 20XX, and the related statement of revenues, expenses, and retained earnings—income tax basis for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of Company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

As discussed in Note X, certain conditions indicate that the Company may be unable to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Firm’s Signature

Report Date

Notes:

1. Authority—Interpretation No. 7 of AR 90 (AR 9090.23–.28) and SSARS No. 19, Review Exhibit D (AR 90.73).

2. See also the Notes at Appendix 7D-1.

Appendix 7D-7 OFS 8/14 7-147

APPENDIX 7H-1

Compilation—Personal Financial Statements, Income Tax Basis, Statement of Changes in Net Assets Also Presented

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

John and Jane Doe City, State

I (We) have compiled the accompanying statement of assets and liabilities—income tax basis of John and Jane Doe as of December 31, 20XX, and the related statement of changes in net assets—income tax basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the income tax basis of accounting.

John and Jane Doe are responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist John and Jane Doe in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes: 1. Authority—Adapted from the AICPA CAR Guide, Exhibit—“Compilations and Reviews of Personal Financial Statements,” and SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. SSARS No. 19 (AR 80.17a) states that the accountant’s report should have a title. If the accountant is independent, then that fact may be indicated in the title.

3. The report should be addressed to the individuals whose financial affairs are presented. In the above example, the report is addressed to a married couple. The address should be appropriately modified if the statements are those of an individual or a family group.

4. The income tax basis of accounting is an other comprehensive basis of accounting. This report assumes that the financial statements include a note such as the following that describes how that basis of accounting differs from GAAP:

John and Jane Doe prepare their financial statements on the accounting basis used for federal income tax purposes; consequently, certain income and related assets are recognized when received rather than when earned, certain expenses are recognized when paid rather than when the obligation is incurred, and assets and liabilities are not adjusted for unrealized gains and losses. If the financial statements do not include such a disclosure, the accountant may want to add the following phrase to the last sentence of the first paragraph of the accountant’s report:

, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Appendix 7H-1 7-148 OFS 8/14

5. Presentation of a statement of changes in net assets is optional. See section 803.

6. The report should be dated as of the completion of the accountant’s work [SSARS No. 19 (AR 80.17g)]. Although SSARS No. 19 requires a representation letter only in review engagements, the authors recommend obtaining a client representation letter in all personal financial statement engagements.

7. Personal financial statements prepared on an OCBOA should have all notes necessary for adequate disclosure.

8. Each financial statement should have a reference to the accountant’s compilation report on each page [SSARS No. 19 (AR 80.18)]. See the discussion in section 204.

Appendix 7H-1 (Continued) OFS 8/14 7-149

APPENDIX 7H-2

Compilation—Personal Financial Statements, Historical Cost Basis

(INDEPENDENT) ACCOUNTANT’S COMPILATION REPORT

John and Jane Doe City, State

I (We) have compiled the accompanying statement of assets and liabilities—historical cost basis of John and Jane Doe as of December 31, 20XX, and the related statement of changes in net assets—historical cost basis for the year then ended. I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with the historical cost basis of accounting.

John and Jane Doe are responsible for the preparation and fair presentation of the financial statements in accordance with the historical cost basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

My (Our) responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist John and Jane Doe in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

Firm’s Signature

Report Date

Notes:

1. Authority—Adapted from the AICPA CAR Guide, Exhibit—“Compilations and Reviews of Personal Financial Statements,” and SSARS No. 19, Compilation Exhibit B (AR 80.64).

2. The historical cost basis is an other comprehensive basis of accounting for personal financial statements. This report assumes that the financial statements include a note such as the following that describes how that basis of accounting differs from GAAP:

John and Jane Doe prepare their financial statements on the historical cost basis of accounting; consequently, assets are presented at acquisition cost net of related amortization rather than at their estimated current values, and liabilities are presented at the amount of obligation incurred less payments, rather than on the basis of estimated current amounts. If the financial statements do not include such a disclosure, the accountant may want to add the following phrase to the last sentence of the first paragraph of the accountant’s report:

, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. 3. See also Notes 2–3 and 5–8 at Appendix 7H-1.

Appendix 7H-2 7-150 OFS 8/14

APPENDIX 7H-3

Review—Personal Financial Statements, Income Tax Basis, Statement of Changes in Net Assets Also Presented

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

John and Jane Doe City, State

I (We) have reviewed the accompanying statement of assets and liabilities—income tax basis of John and Jane Doe as of December 31, 20XX, and the related statement of changes in net assets—income tax basis for the year then ended. A review includes primarily applying analytical procedures to John and Jane Doe’s financial data and making inquiries of John and Jane Doe. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Firm’s Signature

Report Date

Notes:

1. Authority—Adapted from the AICPA CAR Guide, Exhibit—“Compilations and Reviews of Personal Financial Statements,” and SSARS No. 19, Review Exhibit D (AR 90.73).

2. See also Notes 2–8 at Appendix 7H-1. [However, authoritative requirements for an accountant’s review report (as opposed to a compilation report) are located at SSARS No. 19 (AR 90.28).]

Appendix 7H-3 OFS 8/14 7-151

APPENDIX 7H-4

Review—Personal Financial Statements, Historical Cost Basis

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

John and Jane Doe City, State

I (We) have reviewed the accompanying statement of assets and liabilities—historical cost basis of John and Jane Doe as of December 31, 20XX, and the related statement of changes in net assets—historical cost basis for the year then ended. A review includes primarily applying analytical procedures to John and Jane Doe’s financial data and making inquiries of John and Jane Doe. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I (we) do not express such an opinion.

My (Our) responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require me (us) to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. I (We) believe that the results of my (our) procedures provide a reasonable basis for my (our) report.

Firm’s Signature

Report Date

Notes:

1. Authority—Adapted from the AICPA CAR Guide, Exhibit—“Compilations and Reviews of Personal Financial Statements,” and SSARS No. 19, Review Exhibit D (AR 90.73).

2. SeeNote2atAppendix7H-2andNote2atAppendix7H-3.

Appendix 7H-4