Cooke, Lavender, Massey, & Company, PC provides a compilation services to both nonprofit and for-profit companies.
Typically, a compilation is performed simply to gather company financial data and compile that information into a properly presented set of financial statements. A compilation engagement is not an assurance engagement. While these this level of engagement does not require verification of the accuracy of the information provided by management and does not result in an express opinion or a conclusion on the financial statements, compiled financial statements can be valuable to all users of the financial statements including management and outside parties such as banks, lenders, or potential investors.
Compilation engagements do not require testing of accounting records such as those performed in an audit engagement or formal inquiry and analytical procedures performed in a review engagement. Thus, compilation reports do not provide any level of assurance on the financial statements being reported on. In practice, our accountants do obtain general support for significant balances such as bank statements, detail schedules of certain accounts, aging schedules, etc. as part of our compilation procedures.
Our accountants will also request copies of significant agreements (e.g. loan documents) so that the footnotes may be properly drafted.
Compilation Services FAQs
How much do audits cost?
As a lower level engagement, compilation services are generally less expensive than audit and review engagements. Frequently, our clients that require compiled financial statements choose to omit footnote disclosures (an acceptable reporting practice). The omission must be disclosed in the compilation report issued by our firm, however, this omission can significantly reduce our fee for this level of service. Additionally, a statement of cash flows can be omitted from the financial statements which can also help to reduce fees for our services.
How long does a compilation take?
Due to the lack of assurance provided and fewer procedures required, compilation engagements tend to require much less time than the higher level engagements (audits and reviews). This level of engagement can make sense from a budgetary perspective for clients small and large.
When should you get compiled financial statements?
Bankers, bonding companies, grantors, shareholders, and other third parties often require compiled financial statements of a business or nonprofit organization. An annual compilation can be beneficial for numerous reasons. Annual compiled financial statements can provide valuable managerial tools that may not be available with a less detailed tax return.