SSARS- Compilation Engagements

Question 1

Define a compilation report?

Answer 1

Assisting management with the presentation of financial statements (for historical, pro forma, or prospective financial statements).

No required to be independent as no opinion is given on the financial statements

Question 2

What should be stated in the terms of the engagement (engagement letter)?

Answer 2

• Engagement objective
• Management responsibilities
• Accountant responsibilities
• Limitations of the engagement (“You agree to hold us harmless and to release, indemnify, and defend us from any liability or costs, including attorney fees”)
• Identification of the applicable financial framework
• The expected form and content of the compilation report

Question 3

What are the performance responsibilities under a compilation engagement? (What does the accountant need to do to get through a compilation engagement)

Answer 3

1) Read the financial statements
2) Request corrected information if the F/S are incomplete or unsatisfactory
3) If the accountant feels like there needs to be revisions, request management to make those revisions
4) If management refuses to make your adjustments, withdrawal from the engagement

Question 4

What does the compilation report consist of?

Answer 4

1) Management responsibilities for the financial statements (identify the financial statements)
2) Compilation was performed in accordance with SSARS
3) Accountant did not audit or review
4) Statement that disclaims opinion of any form of assurance
5) Signature of accountant on accounting letterhead

Question 5

If a special purpose framework is used, how does that impact the compilation report?

Answer 5

Include a paragraph at the end indicating that a special purpose framework was used

Question 6

If the accountant is not independent, how does that impact the compilation report?

Answer 6

Include a paragraph at the end of the report

Question 7

If there is an omission to disclosure with the intent to mislead, what needs to happen?

Answer 7

Do not issue the report

Question 8

If substantially all disclosures are omitted, how does that impact the report?

Answer 8

Include a paragraph pointing that out and the F/S are not intended for those who are uninformed

Question 9

What are the documentation requirements for a compilation engagement?

Answer 9

1) Engagement letter
2) Copy of the F/S
3) A copy of the compilation report