Compiled financial statements are the most common financial statements prepared by an accountant. Compiled financial statements are the lowest level of reporting by an accountant.
What is the Purpose of Compiled Financial Statements?
The purpose of compiled financial statements is generally to assure the reader that the financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) or some other generally accepted method of accounting.
What Are the Responsibilities Associated with Compiled Financial Statements?
In a compilation, the CPA must comply with certain basic requirements such as having a knowledge of the client’s industry and applicable accounting principles; having a clear understanding with the client of services to be provided and reading the financial statements to determine that there are no obvious departures from generally accepted accounting principles, or in some cases, another comprehensive basis of accounting used.
A compilation is limited to presenting in the form of financial statements information that is the representation of management. As the financial statements are not audited or reviewed, an accountant does not express an opinion or any other form of assurance on them.
Who Requires Compiled Financial Statements?
Compiled financial statements are most often prepared for privately held entities that do not require a higher level of assurance expressed by the CPA. Compiled financial statements may be prepared for general use (not limited to specific persons), for specific use by identified parties or for management purposes only.
Compiled financial statements are probably the most commonly requested financial reporting services provided by certified public accountants. Compiled financial statements are used where audited or reviewed financial statements are not required.