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Compilation of Financial Statements

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Compilation of Financial Statements


AR Section 80

Compilation of Financial Statements
Issue date, unless otherwise indicated: December 2009
See section 9080 for interpretations of this section.

Source: SSARS No. 19
.01 This section establishes standards and provides guidance on compilations of financial statements. The accountant is required to comply with the provisions of this section whenever he or she is engaged to report on compiled financial statements or submits financial statements to a client or to third parties.

Establishing an Understanding
.02 The accountant should establish an understanding with management regarding the services to be performed for compilation engagements1 and should document the understanding through a written communication with management. Such an understanding reduces the risks that either the accountant or management may misinterpret the needs or expectations of the other party. For example, it reduces the risk that management may inappropriately rely on the accountant to protect the entity against certain risks or to perform certain functions that are management's responsibility. The accountant should ensure that the understanding includes the objectives of the engagement, management's responsibilities, the accountant's responsibilities, and the limitations of the engagement. In some cases, the accountant may establish such understanding with those charged with governance.
.03 An understanding with management and, if applicable, those charged with governance, regarding a compilation of financial statements should include the following matters:

The objective of a compilation is to assist management in presenting financial information in the form of financial statements.

The accountant utilizes information that is the representation of management (owners) without undertaking to obtain or...

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