CPAs have struggled with financial statement users placing too much confidence in nonpublic entities' limited‐assurance documents. Despite Statement on Standards for Accounting and Review Services Number 1 (SSARS No. 1) issued in 1979, research shows that CPAs and statement users place confidence in and reliance on CPA compiled and reviewed statements. In 2000, the American Institute of Certified Public Accountants (AICPA) issued SSARS No. 8, Amendment to SSARS No. 1, Compilation and Review of Financial Statements, relating to plain‐paper statements.
We surveyed practicing CPAs and bankers to measure their confidence in and reliance on no‐assurance engagements: compilations, plain‐paper statements, and statements with accountants' reports/letters. We find that both CPAs and bankers report some level of confidence in and reliance on plain‐paper statements. Both parties perceive greater confidence in and reliance on financial statements where a CPA is known to be minimally associated with the statements.