As the Chief Financial Officer (CFO) of a small business, I also hold a valid Certified Public Accountant (CPA) license. Currently, the bank requires us to provide compiled financial statements under a debt service agreement. Obviously, these statements need to clearly state the lack of independence, and I must strictly comply with SSARS 21 (i.e., AR-C Section 80) to ensure compliance. In this context, I would like to understand: Are there any regulations or standards that would prohibit me from personally undertaking and completing this engagement?

First, it should be clarified that SSARS 21 (now codified in AR-C Section 80) provides authoritative guidance for CPAs performing compilation engagements. This standard requires that when there is a non-independent relationship between the CPA and the client, this fact must be clearly disclosed in the compilation report. This disclosure is intended to remind users of the statements that a compilation engagement does not involve an audit or review of the financial information and, therefore, provides no assurance.

However, the core issue is: When the CFO is also a practicing CPA, and the entity in question is their own employer, are there additional independence restrictions or prohibitions? According to the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct and the regulations of state boards of accountancy, independence typically applies to audit and review engagements, but for compilation engagements, independence is not required; it only needs to be disclosed in the report. Therefore, from a standards perspective, a CFO personally undertaking a compilation engagement is not explicitly prohibited.

However, it should be noted that if the CFO also holds a management position within the company, their role may create self-interest threats or management participation threats. In a compilation engagement, since independence is not required, these threats generally do not necessitate safeguards, but adequate disclosure must be ensured. Additionally, if the state where the CFO's CPA license is issued has stricter regulations, further review of state laws or specific requirements of the state board of accountancy is necessary.

In summary, there are currently no clear federal or state regulations prohibiting a CFO from personally completing such a compilation engagement, provided that the disclosure requirements of SSARS 21 (AR-C 80) are strictly followed and the lack of independence is clearly noted in the statements. However, it is advisable to consult the state board of accountancy or professional legal counsel to confirm whether any local special provisions exist.

Thank you for your question.