One of the most common services we provide for you and our other corporate clients is the performance of a Compilation of your entity's financial statements.
This is often the case where the entity’s stakeholders elect not to have an audit or review engagement of their annual financial statements, but there is still a third party reporting requirement or Management simply wants the involvement of the entity’s accountant.
The current standards include limited guidance and requirements. In addition, the basic Notice to Reader report that is attached to compiled financial statements provides minimal information about the scope of the services.
Significant changes are coming to this type of engagement. For fiscal periods ending on or subsequent to December 14, 2021 the current standard is being replaced with Canadian Standard on Related Services 4200, Compilation Engagements (“CSRS 4200”). The enhancements in this new standard are intended to improve the product that is provided by clarifying how the statements are prepared, clearly explaining the separate responsibilities of management and the accountant, and differentiating the service from a bookkeeping engagement.
Changes you will notice include:
Required communication regarding intended use of your financial information by third parties,
Discussion and agreement on, and disclosure of the basis of accounting,
More extensive discussions about your business, operations, accounting systems and records and significant judgements,
Required inquiry when we believe that financial information appears misleading and discussion of appropriate action needed, and
Explicit acknowledgement that management takes responsibility for the final version of the financial statements.
The new Compilation Engagement Report to be attached to the financial statements is designed to communicate this improved process.
A sample of this report and additional details about these changes are available in the CPA Canada’s “Compilation Engagements Management Briefing”. This guide is accessible for download here.
Our team of accounting professionals will be contacting you to let you would know more about how CSRS 4200 will impact your entity's Compilation Engagement.
