Compilation

An accountant tasked with the responsibility of providing compilation services is required to possess sufficient industry-level knowledge of the client. He or she is not required to be independent of the company requiring compilation services in order to perform such a form of engagement. The management accepts full responsibility for the preparation and presentation of the financial statements, which can be either an individual financial statement, such as the balance sheet, or a complete set of financial statements. When performing compilation, the accountant should prepare adequate documentation that provides information on the work that has been carried out. Some of the documentation includes the engagement letter, financial statements, and communication with management regarding significant issues identified during the audit. Once the audit is completed, the accountant prepares a compilation report that states that he/she has not audited the financial statements, and therefore, the audit should not be viewed as an assurance that the financial statements have complied with the financial accounting framework or as an opinion on the accuracy of the financial statements. Where the financial statements have been materially misstated, the accountant should desist from issuing financial statements that are misleading. Instead, the accountant should obtain more information from the management, and if the information is not forthcoming, he/she should withdraw from the engagement.