Compilation Engagements - AICPA

1 Compilation Engagements4505AR-C Section 80 Compilation EngagementsSource: SSARS No. 21; SSARS No. 23; SSARS No. for compilations of financial statements for periods endingon or after December 15, 2015, unless otherwise of This section applies when the accountant is engaged to perform a com-pilation of financial statements, prospective financial information, pro formafinancial information, or other historical financial information. (Ref: par..A1 .A4).[1][As amended, effective for Compilation reports on prospective financialinformation dated on or after May 1, 2017, by SSARS No. 23.]The Compilation a Compilation engagement is not an assurance engagement ,a Compilation engagement does not require the accountant to verify the accu-racy or completeness of the information provided by management or otherwisegather evidence to express an opinion or a conclusion on the financial section is effective for compilations of financial statements for pe-riods ending on or after December 15, 2015.

2 Early implementation is objective of the accountant in a Compilation engagement is to ap-ply accounting and financial reporting expertise to assist management in thepresentation of financial statements and report in accordance with this sec-tion without, undertaking to obtain or provide any assurance that there areno material modifications that should be made to the financial statementsin order for them to be in accordance with the applicable financial purposes of Statements on Standards for Accounting and ReviewServices (SSARSs), the following terms have the meanings attributed as fol-lows:[1][Footnote deleted by the issuance of SSARS No. 23, October 2016.]

3 ] 2021, AICPAAR-C on Standards for Accounting and Review ServicesBasic financial statements excluding supplemen-tary information and required supplementary accepted accounting principles (GAAP).Reference togenerally accepted accounting principlesin SSARSs means gener-ally accepted accounting principles promulgated by bodies desig-nated by the Council of the AICPA pursuant to the "ComplianceWith Standards Rule" (ET sec. ) and the "Accounting Prin-ciples Rule" (ET sec. ) of the AICPA Code of person(s) with executive responsibility for the con-duct of the entity's operations. For some entities, management includessome or all of those charged with governance (for example, executivemembers of a governance board or an owner-manager).

4 Difference between the amount, classification, presenta-tion, or disclosure of a reported financial item and the amount, classi-fication, presentation, or disclosure that is required for the item to bepresented fairly in accordance with the applicable financial reportingframework. Misstatements can arise from fraud or also include those adjustments of amounts, classifica-tions, presentations, or disclosures that, in the accountant's profes-sional judgment, are necessary for the financial statements to be pre-sented fairly, in all material supplementary that a designatedaccounting standards-setter requires to accompany an entity's basicfinancial statements.

5 Required supplementary information is not partof the basic financial statements; however, a designated accountingstandards-setter considers the information to be an essential part offinancial reporting for placing the basic financial statements in an ap-propriate operational, economic, or historical context. In addition, au-thoritative guidelines for the methods of measurement and presenta-tion of the information have been presented outside the basicfinancial statements, excluding required supplementary information,that is not considered necessary for the financial statements to befairly presented in accordance with the applicable financial reportingframework.

6 Such information may be presented in a document con-taining the financial statements subjected to the Compilation engage-ment or separate from the financial statements subjected to the com-pilation engagement . (Ref: par..A6 .A7)Those charged with person(s) or organization(s) (forexample, a corporate trustee) with responsibility for overseeing thestrategic direction of the entity and the obligations related to the ac-countability of the entity. This includes overseeing the financial report-ing process. Those charged with governance may include managementpersonnel (for example, executive members of a governance board oran owner-manager).[Revised, October 2016, to reflect conforming changes necessary due to theissuance of SSARS No.]

7 23. As amended, effective for compilations of finan-cial statements for periods ending on or after December 15, 2021, by SSARSNo. 25.]AR-C 2021, AICPAC ompilation Engagements4507 RequirementsGeneral Principles for Performing and Reporting onCompilation addition to complying with this section, an accountant is requiredto comply with section 60,General Principles for Engagements Performed inAccordance With Statements on Standards for Accounting and Review accountant must determine whether the accountant is indepen-dent of the entity. (Ref: par..A8)Acceptance and Continuance of Client Relationships andCompilation a condition for accepting an engagement to perform a compilationwith respect to an entity's financial statements, in addition to the requirementsin paragraph.

8 26 of section 60, the accountant should obtain the agreement ofmanagement that it acknowledges and understands its the preparation and fair presentation of financial statementsin accordance with the applicable financial reporting frameworkand the inclusion of all informative disclosures that are appro-priate for the applicable financial reporting framework used toprepare the entity's financial statements. If the financial state-ments are prepared in accordance with a special purpose frame-work, this includes (Ref: par..A9)i. a description of the special purpose framework, includinga summary of significant accounting policies, and how theframework differs from GAAP, the effect of which need notbe quantified, and informative disclosures similar to thoserequired by GAAP, in the case of special purpose finan-cial statements that contain items that are the same as,or similar to, those in financial statements prepared in ac-cordance with GAAP, (Ref: par.)

9 A30)ii. a description of any significant interpretations of the con-tract on which the special purpose financial statements areprepared, in the case of financial statements prepared inaccordance with a contractual basis of accounting, andiii. additional disclosures beyond those specifically requiredby the framework that may be necessary for the specialpurpose framework to achieve fair include the accountant's Compilation report in any documentcontaining financial statements that indicates that the entity'saccountant has performed a Compilation engagement on such fi-nancial statements unless a different understanding is reached.(Ref: par..A10).09If the accountant is not satisfied about any of the matters set out inparagraph.

10 26 of section 60 or paragraph .08 of this section as preconditions foraccepting a Compilation engagement , the accountant should discuss the matterwith management or those charged with governance. If changes cannot be made 2021, AICPAAR-C on Standards for Accounting and Review Servicesto satisfy the accountant about those matters, the accountant should not acceptthe proposed on engagement accountant should agree upon the terms of the engagement withmanagement or those charged with governance, as appropriate. The agreed-upon terms of the engagement should be documented in an engagement letteror other suitable form of written agreement between the parties and shouldinclude the following: (Ref: par.)