Compilation report checklist matrix required elements

Guidance: compilation report – required elements

Section of the compilation report

When included in the compilation report

Required elements

Reference (See detailed requirements below table)

Title

Not required    

Addressee

Always
  1. Appropriate addressee
Not required
Introductory paragraph Always
  1. Includes a statement that management (owners) is (are) responsible for the financial statements.

  2. Identifies the financial statements that have been subjected to the compilation engagement.

  3. Identifies the entity whose financial statements have been subjected to the compilation engagement.

  4. Specifies the date or period covered by the financial statements.

  5. States that the accountant performed the compilation engagement in accordance with the Statements on Standards for Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services Committee of the AICPA.

  6. States that the accountant did not audit or review the financial statements nor was the accountant required to perform any procedures to verify the accuracy or completeness of the information provided by management and does not express an opinion, a conclusion, nor provide any assurance on the financial statements.

AR-C 80.17 a-f
Separate paragraph, as applicable When financial reporting framework is other than GAAP (Special Purpose Framework).
  1. Indicates that the financial statements are prepared in accordance with the applicable special purpose framework.

  2. Describes the financial reporting framework and references a footnote (if disclosures are included).

  3. States the special purpose framework is a basis of accounting other than GAAP.

AR-C 80.18 - .21
Separate paragraph, as applicable When financial reporting framework is other than GAAP (Special Purpose Framework).
  1. Indicates that the financial statements are prepared in accordance with the applicable special purpose framework.

  2. Describes the financial reporting framework and references a footnote (if disclosures are included).

  3. States the special purpose framework is a basis of accounting other than GAAP.

AR-C 80.18 - .21
Separate paragraph, as applicable When substantially all disclosures are omitted (departure from financial reporting framework).
  1. States that management has elected to omit substantially all the disclosures (and the statement of cash flows, if applicable) required by the applicable financial reporting framework (or ordinarily included in the financial statements if the financial statements are prepared in accordance with a special purpose framework).
  2. States that if the omitted disclosures (and the statement of cash flows, if applicable), were included in the financial statements, they might influence the user's conclusions about the entity's financial position, results of operations, and cash flows (or the equivalent for presentations other than GAAP).
  3. States that, accordingly, the financial statements are not designed for those who are not informed about such matters.
AR-C 80.26 - .28
Separate paragraph, as applicable When there are known departures from the applicable financial reporting framework (and the accountant concludes that the modification of the report is adequate).
  1. States the departure from the financial reporting framework; wording depends upon the circumstances.

  2. Either disclose the effects of the departure on the financial statements if such effects have been determined by management or are readily known to the accountant as the result of the accountant’s procedures.

  3. If the effects of the departure have not been determined by management or are not readily known to the accountant as the result of the accountant's procedures, states that management has not determined the effects of the departure on the financial statements, if applicable.

AR-C 80.29 - 33
Separate paragraph, as applicable When supplementary information is presented, but not required (and the accountant chooses to present in a separate paragraph rather than a separate report).

Supplementary information subjected to the compilation

  1. States that the supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements.

  2. States that the supplementary information is the responsibility of management.

  3. States that the supplementary information was subject to the compilation engagement.

  4. States that the accountant has not audited or reviewed the supplementary information and does not express an opinion, a conclusion, nor provide any assurance on such information.

Supplementary information not subject to the compilation

  1. States that the supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements.

  2. States that the supplementary information is the responsibility of management.

  3. States that the supplementary information was not subject to the compilation engagement and the accountant does not express an opinion, a conclusion, nor provide any assurance on such information.

AR-C 80.34 - .36
Separate paragraph, as applicable When supplementary information is required **.

Required supplementary information

The other matter paragraph should include language to explain the following circumstances, as applicable:

  1. The required supplementary information is included, and the accountant performed a compilation engagement on the required supplementary information.

  2. The required supplementary information is included, and the accountant did not perform a compilation, review or audit on the required supplementary information (see additional guidance below).

  3. The required supplementary information is omitted (see additional guidance below).

  4. Some required supplementary information is missing, and some is presented in accordance with the prescribed guidelines.

  5. The accountant has identified departures from the prescribed guidelines.

  6. The accountant has unresolved doubts about whether the required supplementary information is presented in accordance with prescribed guidelines.

Required supplementary information not subject to the compilation

The separate paragraph in the accountant’s compilation report should include the following elements:

  1. States that [identify the applicable financial reporting framework] requires that the [identify the required supplementary information] be presented to supplement the basis financial statements.

  2. States that such information, although not a party of the basic financial statements, is required by [identify the designated accounting standards-setter], who considered it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historic context.

  3. States that the accountant did not perform a compilation, review, or audit on the required supplementary information and does not express an opinion, a conclusion, nor provide any assurance on the information.

  4. If some of the required supplementary information is omitted:

    1. States that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework] require to be presented to supplement the basic financial statements.

    2. States that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

  5. If the measurement or presentation of the required supplementary information departs materially from the prescribed guidelines, states that material departures from prescribed guidelines exist [describe the material departures from the applicable financial reporting framework].

  6. If the accountant has unresolved doubts about whether the required supplementary information is measured or presented in accordance with prescribed guidelines, states that the accountant has doubts about whether material modifications should be made to the required supplementary information for it to be presented in accordance with guidelines established by [identify designated accounting standards-setter].

Required supplementary information that is omitted

The separate paragraph in the accountant’s compilation report should include the following elements:

  1. States that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework] require to be presented to supplement the basic financial statements.
  2. States that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

**The wording related to the required supplementary information will depend on the circumstances.

AR-C 80.37 - .39
Separate paragraph when elected When accountant elects to restrict the use of the report (never required, not precluded)**.
  1. States that the accountant's compilation report is intended solely for the information and use of the specified parties.

  2. Identifies the specified parties for whom use is intended.

  3. States that the accountant's compilation report is not intended to be, and should not be, used by anyone other than the specified parties.

**Restricted use could be considered in financial statements prepared in accordance with a prescribed format.

Preparation, Compilation and Review Engagements Guide AAG-CRV 2.86-2.87 and AR-C 90.104 (for content of paragraph)
Last paragraph When accountant is not independent.
  1. States that accountant is not independent (required).

  2. States reason(s) for lack of independence (optional).

AR-C 80.22 - .23
Signature Always
  1. Manual or printed; follow firm policy.

AR-C 80.17g
City and state Always
  1. City and state where the accountant practices.

AR-C 80.17h

Date of accountant’s report Always
  1. Date the required compilation procedures are completed.

AR-C 80.17i

The accountant’s compilation report

The accountant’s compilation report should be in writing and (AR-C 80.17):

  1. Include a statement that management (owners) is (are) responsible for the financial statements.

  2. Identify the financial statements that have been subjected to the compilation engagement.

  3. Identify the entity whose financial statements have been subjected to the compilation engagement.

  4. Specify the date or period covered by the financial statements.

  5. Include a statement that the accountant performed the compilation engagement in accordance with SSARSs promulgated by the Accounting and Review Services Committee of the AICPA.

  6. Include a statement that the accountant did not audit or review the financial statements nor was the accountant required to perform any procedures to verify the accuracy or completeness of the information provided by management and does not express an opinion, a conclusion, nor provide any assurance on the financial statements.

  7. Include the signature of the accountant or the accountant’s firm.

  8. Include the city and state where the accountant practices.

  9. Include the date of the report, which should be the date that the accountant has completed the procedures required by this section.

The accountant’s compilation report on financial statements prepared in accordance with a special purpose framework

Unless the entity elects to omit substantially all disclosures, the accountant should modify the compilation report when that accountant becomes aware that the financial statements do not include (AR-C 80.18):

  1. A description of the special purpose framework.

  2. A summary of significant accounting policies.

  3. An adequate description about how the special purpose framework differs from GAAP. The effects of these differences need not be quantified.

  4. Informative disclosures similar to those required by GAAP when the financial statements contain items that are the same as, or similar to, those in financial statements prepared in accordance with GAAP.

In the case of financial statements prepared in accordance with the provisions of a contract, the accountant should consider whether the financial statements adequately describe any significant interpretations of the contract on which the financial statements are based and modify the compilation report if the financial statements do not adequately describe any significant interpretations of the contract on which the financial statements are based (AR-C 80.19).

In the case of an accountant’s compilation report on special purpose financial statements, if management has a choice of financial reporting frameworks in the preparation of the special purpose financial statements, the explanation of management’s responsibility for the financial statements should also make reference to its responsibility for determining that the applicable financial reporting framework is acceptable in the circumstances (AR-C 80.20).

The accountant’s compilation report on financial statements prepared in accordance with a special purpose framework should include a separate paragraph that (AR-C 80.21):

  1. Indicates that the financial statements are prepared in accordance with the applicable special purpose framework.

  2. Refers to the note to the financial statements that describes the framework, if applicable.

  3. States that the special purpose framework is a basis of accounting other than GAAP.

For special purpose financial statements prepared in accordance with a contractual basis of accounting, the separate paragraph should also state that, as a result, the financial statements may not be suitable for another purpose.

Reporting when the accountant is not independent

When the accountant is not independent with respect to the entity, the accountant should indicate the accountant’s lack of independence in a final paragraph of the accountant’s compilation report (AR-C 80.22).

If the accountant elects to disclose a description about the reasons the accountant’s independence is impaired, the accountant should include all such reasons in the description (AR-C 80.23).

Reporting on financial statements that omit substantially all the disclosures required by the applicable financial reporting framework

The accountant should not issue an accountant’s compilation report on financial statements that omit substantially all disclosures required by the applicable financial reporting framework if, in the accountant’s professional judgment, such financial statements would be misleading to users of the financial statements. (AR-C 80.26)

When reporting on financial statements that omit substantially all disclosures required by the applicable financial reporting framework, the accountant should include a separate paragraph in the accountant’s compilation report that includes the following elements (AR-C 80.27):

  1. A statement that management has elected to omit substantially all the disclosures (and the statement of cash flows, if applicable) required by the applicable financial reporting framework (or ordinarily included in the financial statements if the financial statements are prepared in accordance with a special purpose framework).

  2. A statement that if the omitted disclosures (and the statement of cash flows, if applicable) were included in the financial statements, they might influence the user's conclusions about the entity's financial position, results of operations, and cash flows (or the equivalent for presentations other than GAAP).

  3. A statement that, accordingly, the financial statements are not designed for those who are not informed about such matters.

The omission of one or more notes, when substantially all other disclosures are presented, should be treated in a compilation report like any other departure from the applicable financial reporting framework, and the nature of the departure and its effects, if known, should be disclosed in accordance with AR-C 80.29 - .33 (AR-C 80.28).

Reporting known departures from the applicable financial reporting framework

When the accountant becomes aware of a departure from the applicable financial reporting framework (including inadequate disclosure) that is material to the financial statements and the financial statements are not revised, the accountant should consider whether modification of the standard report is adequate to disclose the departure (AR-C 80.29).

If the accountant concludes that modification of the standard report is adequate, the departure should be disclosed in a separate paragraph of the report. The effects of the departure on the financial statements should be disclosed if such effects have been determined by management or are readily known to the accountant as the result of the accountant's procedures (AR-C 80.30).

If the effects of the departure have not been determined by management or are not readily known to the accountant as a result of the accountant’s procedures, the accountant is not required to determine the effects of a departure; however, in such circumstances, the accountant should state in the report that such determination has not been made by management (AR-C 80.31).

If the accountant believes that modification of the compilation report is not adequate to indicate the deficiencies in the financial statements as a whole, the accountant should withdraw from the engagement and provide no further services with respect to those financial statements (AR-C 80.32).

The accountant should not modify the compilation report to include a statement that the financial statements are not in conformity with the applicable financial reporting framework (AR-C 80.33).

Supplementary information that accompanies financial statements and the accountant’s compilation report thereon

When supplementary information accompanies financial statements and the accountant’s compilation report thereon, the accountant should clearly indicate the degree of responsibility, if any, the accountant is taking with respect to such information in either (AR-C 80.34):

  1. A separate paragraph in the accountant’s compilation report on the financial statements.

  2. A separate report on the supplementary information.

When the accountant has performed a compilation engagement with respect to both the financial statements and the supplementary information, the accountant should include a separate paragraph in the accountant’s compilation report on the financial statements or issue a separate report on the supplementary information that states (AR-C 80.35):

  1. The supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements.

  2. The supplementary information is the responsibility of management.

  3. The supplementary information was subject to the compilation engagement.

  4. The accountant has not audited or reviewed the supplementary information and does not express an opinion, a conclusion, nor provide any assurance on such information.

When the accountant has performed a compilation engagement with respect to the financial statements but the supplementary information was not subject to the compilation engagement, the accountant should include a separate paragraph in the accountant’s compilation report on the financial statements or issue a separate report on the supplementary information that states (AR-C 80.36):

  1. The supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements.

  2. The supplementary information is the responsibility of management.

  3. The supplementary information was not subject to the compilation engagement and the accountant does not express an opinion, a conclusion, nor provide any assurance on such information.

Required supplementary information

With regard to the requirement in AR-C 80.34, with respect to required supplementary information, the accountant should include a separate paragraph in the accountant’s compilation report on the financial statements. The other-matter paragraph should include language to explain the following circumstances, as applicable (AR-C 80.37):

  1. The required supplementary information is included, and the accountant performed a compilation engagement on the required supplementary information.

  2. The required supplementary information is included, and the accountant did not perform a compilation, review, or audit on the required supplementary information.

  3. The required supplementary information is omitted.

  4. Some required supplementary information is missing, and some is presented in accordance with the prescribed guidelines.

  5. The accountant has identified departures from the prescribed guidelines.

  6. The accountant has unresolved doubts about whether the required supplementary information is presented in accordance with prescribed guidelines.

If the entity has presented all or some of the required supplementary information and the accountant did not perform a compilation engagement on the required supplementary information, the separate paragraph in the accountant’s compilation report referred to in AR-C 80.34 should include the following elements: (AR-C 80.38):

  1. A statement that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] requires that the [identify the required supplementary information] be presented to supplement the basic financial statements.

  2. A statement that such information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

  3. A statement that the accountant did not perform a compilation, review, or audit on the required supplementary information and does not express an opinion, a conclusion, nor provide any assurance on the information.

  4. If some of the required supplementary information is omitted:

    1. A statement that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] require to be presented to supplement the basic financial statements.

    2. A statement that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

  5. If the measurement or presentation of the required supplementary information departs materially from the prescribed guidelines, a statement that material departures from prescribed guidelines exist [describe the material departures from the applicable financial reporting framework].

  6. If the accountant has unresolved doubts about whether the required supplementary information is measured or presented in accordance with prescribed guidelines, a statement that the accountant has doubts about whether material modifications should be made to the required supplementary information for it to be presented in accordance with guidelines established by [identify designated accounting standards-setter].

If all the required supplementary information is omitted, the separate paragraph in the accountant’s compilation report should include the following elements (AR-C 80.39):

  1. A statement that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] require to be presented to supplement the basic financial statements.

  2. A statement that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.