A compilation is the one of the lowest level financial statement services an accountant can provide. A compilation consists essentially of presenting information obtained from a client in financial statement format. There is no assurance being provided by the accountant.
What is the difference between prepared and compiled financial statements?
The prepared financial statement requires no verification of the independence of the auditor. In a compiled financial statement, the CPA is required to evaluate and disclose his or her independence with regards to the entity being audited and evaluate the financial statements for obvious material misstatements.
Can a non CPA prepare compiled financial statements?
Only a CPA can prepare an audited financial statement and a reviewed financial statement. However, both CPAs and non-certified accountants, including bookkeepers, can prepare compiled financial statements.
Are preparation of financial statements subject to peer review?
For firms already enrolled in the Program, engagements to prepare financial statements would fall within the scope of peer review. Independent of AICPA requirements, please note that some SBOAs require firms that only perform these engagements to enroll in peer review as a licensing requirement.
What’s the difference between a prepared and compiled financial statement?
The prepared financial statement requires no verification of the independence of the auditor. The Certified Public Accountant (CPA) takes the client information and puts it in the financial statement format without providing any assurance on the accuracy and completeness of the information.
When do you need a financial statement compilation?
A compilation is typically appropriate when initial or lower amounts of financing or credit are sought or there is significant collateral in place. Though no assurance is provided, outside parties may appreciate your association with a CPA, which is readily apparent in the formal compilation report.
Why do you need a financial statement preparation service?
The financial statement preparation service is primarily intended for your own use to have current information on the financial standing of your business and to make decisions accordingly. In essence this service is no different from what an in-house controller or CFO would provide to management in a larger company.
How often do financial statements need to be prepared?
Typically, this service is performed in conjunction with bookkeeping or transaction processing services and can be monthly, quarterly or annually. The financial statements are prepared in accordance with an acceptable financial reporting framework.
