What is a Compilation?
Your financial data is used to compile financial statements, including the Balance Sheet, Income Statement, and Statement of Equity. These statements are for your company’s internal use to help assess your company’s performance.
In certain cases, these can be used for banks and other external parties. This is often an incorrect use of the compiled statements as they provide no assurance to these external parties. A Review or Audit Engagement may be more appropriate for these user’s needs.
Why a Compilation?
As noted above some financial institutions will ask for compilations to be completed in line with specified accounting standards. This in itself is a problem, a report for a compilation can only state the basics of accounting within Note X.
Note X cannot attest that the statements conform with a set of accounting standards as a whole because a compilation does not have any assurance associated with the engagement, it can only attest to how the basics are accounted for.
It is similar to asking a mechanic for an inspection report while coming in for an oil change.
If they require the report from the accountant to state it conforms with a specific accounting framework (ASPE, IFRS, US GAAP) then an assurance engagement is required and is beyond the scope of a compilation engagement.
There are other reasons to have a compilation completed without any external requirements. A compilation gives an overview of your company’s financial information in a simple format. Combined with a Frosty Squirrel value-added approach of ensuring that you have a better understanding of the places your company can improve.
What is Included with a Compilation?
- Compilation report (Issued by Frosty Squirrel CPA)
- Balance Sheet
- Income Statement
- Statement of Retained Earnings
- Cash Flow Statement (on Request)
- Note X, which describes the basics of the accounting basis of the financial statements
- Corporate Tax Return (T2) or Personal Tax Return (T1, for Sole Proprietors)
- A Monthly, Quarterly or Annual Improvement Meeting
When Frosty Squirrel performs a compilation we ensure that all the financial statements are balanced and appropriate for your company or organization.
In addition to these financial statements, Frosty Squirrel provides advice on ways to improve operations or bring areas of concern to your attention.
*Dedicated meetings can be either through Zoom or in-person, at the discretion of both parties.