What is a Compilation Engagement
or Notice to Reader?
Every company in Canada has to file taxes. A Compilation Engagement or Notice to Reader is typically done by an outside accountant in order to prepare the tax return. This may even be required by your financial institution for any lending requirements.
A Compilation Engagement is not intended to express an opinion or provide assurance regarding the information contained in the financial statement.
The external chartered accountant uses data provided by the company to compile required documents.
Who is responsible for the financial statements?
When providing Compilation Engagement the accountant gives zero liability.
A report called a “Notice to Reader” is included in the delivered documents stating that the financial statements are not audited and that there is no assurance provided by the CPA.
When is Compilation Engagement
It can be used when the expertise of an accounting professional is required to compile the financial statements but there is no assurance on the financial statements required, when the statements are used for internal or transaction purposes.
What are the benefits
of Compilation Engagement?
One of the benefits is the cost effectiveness, when no assurance is required you can save time and money on a Compilation Engagement that may require less work and resources than a review engagement. Another one is that the financial statements have been compiled by a professional accountant.
What documents are included?
A Compilation Engagement (Notice to Reader) report should be in writing and include information about the client, the accountant, responsibilities of both sides and purpose for which the financial information is prepared.
The three main documents include – Engagement letter, Financial statements and Compilation report (Notice to Reader).