A Compilation Engagement involves applying accounting expertise to assist management in preparing and presenting financial information in the form of financial statements, without expressing any assurance on them.
These are governed by SRS 4410 (Revised) and are often undertaken for small to mid-sized businesses where a full audit or review engagement is not required.
Key considerations while performing a compilation engagement:
- Ensure you are independent as required by relevant ethical standards.
- Gain basic knowledge of the client’s business, industry, and accounting policies to compile relevant and accurate statements.
- Clarify that management is responsible for the financial statements and the accuracy of the underlying data.
- Do not perform audit or review procedures such as testing transactions or confirming balances.
- Always obtain a written engagement letter detailing the nature and limitations of the engagement.
- If the statements are to be used by third parties, ensure that the users understand no assurance is provided.
- Clearly state in the compilation report that no assurance is provided.
