Comprehensive financial statement audit, review and compilation for your organization.
For Canadian public companies, providing transparent and accurate financial information is essential to building trust with investors, regulators, and stakeholders. Compiled financial statements are one of the tools companies use to communicate their financial health. Unlike audits or reviews, compiled statements offer a straightforward summary of financial data prepared in accordance with specific accounting standards. This guide clarifies the role, standards, and applications of compiled statements within frameworks like ASPE and IFRS.
Compiled financial statements are structured financial reports based on information provided by management. While they offer a snapshot of a company’s financial status, they do not involve the verification or testing required in audits or reviews.
During a compilation engagement, an accountant organizes the company’s financial data into formal financial statements without providing assurance on data accuracy. This makes compilations distinct from reviews and audits, where varying levels of assurance and scrutiny are applied.
Understanding the differences between compilation, review, and audit engagements is essential to selecting the right option for your company’s needs.
In a compilation, an accountant organizes financial data into structured reports without assurance on accuracy. This cost-effective option is ideal for companies that need statements primarily for internal decision-making.
A review provides limited procedures and moderate assurance that financial statements are free from material misstatements. It is more rigorous than a compilation but less extensive than an audit.
Audits involve a comprehensive examination of financial records and procedures, resulting in high assurance. Required by regulatory authorities for public companies, audits include in-depth testing for data accuracy.
Assurance Level
Compilations provide no assurance, reviews offer limited assurance, and audits deliver high assurance, which is crucial for stakeholders needing reliable financial information.
Cost and Efficiency
Compilations are the most affordable and quickest option. Audits, being the most thorough, require more time and resources.
Procedures
Compilations focus on organizing data. Reviews add inquiries and analytical procedures, while audits include verification, substantive testing, and internal control assessment.
Report Type
Compiled statements include a basic disclaimer, reviews provide a limited assurance report, and audits include a detailed audit report with the auditor’s opinion.
Regulatory Compliance
Public companies and regulated entities generally require audits, whereas smaller or private companies may opt for compilations depending on stakeholder requirements.
While audits and reviews are more commonly associated with public companies due to regulatory obligations, compiled financial statements also play an important role. They are primarily used for:
Compiled financial statements provide a snapshot of the company’s financial position, allowing management to make timely decisions.
Compilations can serve as a cost-effective method for creating interim financial reports between audited periods.
In some cases, compiled statements are used as a preliminary step before undertaking more detailed assurance procedures.
Canadian public companies must adhere to established accounting standards when preparing financial statements. Whether a company uses ASPE or IFRS depends on its regulatory obligations and the specific reporting requirements for each entity.
Choosing between ASPE and IFRS depends on the financial reporting needs of the parent company and the regulatory requirements applicable to each entity within the organization.
Compiled financial statements are typically less expensive to prepare compared to reviewed or audited financial statements, making them suitable for internal use or preliminary analysis.
Since they do not involve assurance procedures, compiled statements can be prepared more quickly, providing timely financial insights for decision-making.
Management can request specific information to be included, providing a tailored overview of the financial situation without the rigidity of audits.
Unlike audits or reviews, compiled statements do not provide any assurance on the accuracy or completeness of the financial data.
Due to the lack of verification, compiled statements are not suitable for external stakeholders who require reliable and assured information.
The accuracy of compiled financial statements depends entirely on the quality of the information provided by management. Errors in data input can lead to misleading conclusions.
For public companies, transparency is critical to maintaining investor confidence. Although compiled financial statements do not provide assurance, following accounting standards like IFRS ensures that statements are consistent and comparable. This consistency offers stakeholders a reliable, clear view of financial health, even in the absence of detailed audits.
Compiled financial statements offer Canadian public companies a practical solution for situations where speed and cost-efficiency are prioritized over assurance. While compilations do not provide the insights of reviews or audits, they are a cost-effective way to monitor financial health and support management’s internal decision-making. By ensuring ASPE or IFRS compliance, compiled statements promote transparency, consistency, and accountability, even without formal assurance.
As a CPAB-registered firm, Dimov Audit is committed to upholding the highest standards in financial reporting. Our team ensures your compiled statements are prepared with adherence to ASPE or IFRS, providing you with consistent, transparent insights that support strategic planning. Contact us today to learn how our compilation services can enhance your financial clarity and support your company’s informed decision-making.
Our dedicated team is ready to assist you on your path to financial success.
2021 Fillmore St
Suite 9141
San Francisco, CA 94115
2021 Fillmore St
Suite 9141
San Francisco, CA 94115