A basic service that the Certified Public Accountant provides to the company is the compilation of financial statements pertaining to the financial statements of the company. This compilation is not as exhaustive as an audit nor is as detailed as an accountant review report. The main purpose of accounting compilation is to conform to the Generally Accepted Accounting Principles or GAAP, for short. The need for accounting compilation arises when certified Public Accountants are called in to prepare the financial statements of small businesses, which do not have a lot of accounting staff and capabilities. These CPAs will prepare financial records, balance sheets, income statements, cash flow statements and notes on the financial statements as well.
The compilation made by the CPA should conform with the professional standard's requirements that include all the accounting principles that are be applicable as well understanding clearly what the client requires of the certified public accountant in terms of the type of services to be rendered, as well as perusing carefully the accounting statements to form an opinion whether there have or have not been any departures from the Generally Accepted Accounting Principles (GAAP).
All financial statements shall be accompanied with a compilation report that will state that all of the information contained within the financial statements had been prepared by a certified public accountant and that the information given is nothing more than a representation of the management. The accuracy of the information cannot be ascertained through an accounting compilation report as there will have been no great in-depth study and examination of the financial statements nor has there been any testing performed on the data to ensure greater
accuracy.
Mostly, the accounting compilation report is used as a minimum document to satisfy a bank loan agreement or even an insurance company performance bond. So what it all boils down to is that the accounting compilation report is just a presentation of financial statement data with an assurance from the certified public accountant that it conforms to Generally Accepted Accounting Principles (GAAP) and nothing more. This assurance is based as a result of performing inquiries and analytical procedures on the financial statements and the results of the procedures performed are stated clearly.
Some recent changes by the AICPA Accounting Review Services Committee (ARSC) allows the accountant who is associated with the financial statements of the company to state that, in case the statements have not been compiled, such financial statements have not been compiled. The same is the case for instances of non-audited or reviewed financial statements. This provision has been recently included to give an accountant language to use when accounting compilation has not been performed.
As with other financial documents requiring a lot of preparatory work, there are available in the market a number of documents that have specially been prepared to cater to the needs of such special instances like accounting compilation reports and, which for a low cost, can serve the purpose adequately, economically and without the need to reinvent the wheel. All the necessary research has been done and the documents hold all information pertinent to an accounting compilation report. The only requirement is that of filling out the necessary information like name of Company and date of submission etc. and the buyer gets a ready made accounting compilation report.
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