Accounting
The Evolution of the Compilation Engagement Report
Understanding the recent changes made to compilation standards by the AASB and their impact on your business.
The Auditing and Assurance Standards Board (AASB) renewed the standard surrounding compilation engagement preparation (2021), after having renewed the review engagement report (2017) and the audit engagement report (2018). This change aims to improve transparency and standardize practices surrounding the compilation of financial information.
Why this change?
- Have a more detailed and transparent compilation engagement report regarding management and practitioner responsibilities
- Standardize financial information preparation practices
- Better meet the needs of third parties who use financial reports
What is the impact for the business?
The business must first identify which third parties request copies of its financial reports. Then, for each stakeholder, agreements must be reviewed to determine the accounting method to use and whether the third party can request additional information.
What is the impact on your financial report?
- The terminology "financial information" must now be used rather than "financial statements"
- The terminology "compilation engagement" must now be used rather than "notice to reader"
- A new, more detailed and informative report
- There is no longer a requirement to have "(Unaudited)" on each page
- A note must be presented indicating the accounting method applied