The Complete CPA Reference

CHAPTER 11

Compilation, Review, and Other Reporting Services

A practitioner whose client's stock is not publicly traded is often requested to compile or review financial statements. When an accountant is involved in the compilation or review of a client's financial statements, he or she is generally required to issue a report at the conclusion of the engagement.

Compilation and review services represent two types of engagements that practitioners face daily. This chapter explains these services and the reporting practices associated with them, in addition to special reports generally associated with audit engagements.

Engagements involving prospective financial statements and attestation services, which are also discussed, should be viewed by the practitioner as an important area for practice expansion.

Compilation of Financial Statements

What is a compilation of financial statements?

A compilation of financial statements is an engagement designed to assist management in presenting in the form of financial statements information that is the representation of management. A key characteristic of a compilation is that no opinion or any other form of assurance is expressed on the fairness of the presentation of the financial statements. Accordingly, the accountant is not required to make inquiries or perform procedures to verify or review management-furnished information. A compilation engagement is an attest engagement, because it requires independence. It is not, however, an assurance ...