Compilations
In a compilation engagement, the objective is to assist management in presenting financial information in the form of financial statements without undertaking to provide any assurance that there are no material modifications that should be made to the financial statements so they will conform to the acceptable financial reporting framework.Compilations don’t require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business. With that being said, we will still take a common sense look at the data and decide whether it contains errors or is incomplete and needs adjustments.
Compiled financial statements assist management in making operating decisions, making budget decisions, and completing loan applications.
A company prepares its own monthly financial statements by using popular accounting software. However, as part of the company’s loan agreement with its bank, the company must provide the bank with annual financial statements that have been compiled by a certified public accountant.
Compilations is an appropriate description of what the accountant actually does when engaged to provide this type of service.Compilations or Notice to Reader financial statements are the most basic financial statements
The Benefits
i) Compilations are less expensive than audits and reviews because they involve less work.
ii) Straightforward method that doesn't involve extensive investigative work.
iii) For small businesses, startups, or organizations without complex financials or a need for detailed audits, compilations serve as a reliable way to present their financial position
Compilations Features
i) Simple Financial Statements.
ii) Formal Compilation Report.
iii) No Verification or Testing
iv) Cost-Effective