In a compilation engagement, the accountant presents in the form of financial statements information that is the representation of management (owners) without undertaking to express any assurance on the statements. In other words, using management's records, the accountant creates financial statements without gathering evidence or opining about the validity of those underlying records. Because compiled financial statements provide the reader no assurance regarding the statements, they represent the lowest level of financial statement service accountants can provide to their clients. Accordingly, standards governing compilation engagements require that financial statements presented by the accountant to the client or third parties must at least be compiled.
Illinois Report from Review of Financial Statements and Compilation by Accounting Firm is a comprehensive document that provides a detailed evaluation of the financial performance and position of an entity or organization operating in the state of Illinois. This report is generated by an accounting firm following an in-depth examination of financial statements and supporting records. The purpose of the Illinois Report from Review of Financial Statements and Compilation by Accounting Firm is to assess the accuracy, reliability, and compliance of financial statements with Generally Accepted Accounting Principles (GAAP) as mandated by the Illinois State Board of Accountancy. There are two primary types of reports that can be issued by an accounting firm in Illinois: 1. Illinois Report from Review of Financial Statements: This report provides limited assurance that the financial statements are free from material misstatement. During a review engagement, the accounting firm performs analytical procedures, inquiries, and discussions with company management to obtain a reasonable basis for expressing limited assurance. The report includes a statement of the firm's review, descriptions of the procedures performed, significant findings, and a conclusion. 2. Illinois Report from Compilation of Financial Statements: This report is issued when an accounting firm is engaged to collect, classify, and summarize financial information provided by a company's management. Unlike a review engagement, a compilation engagement does not provide any assurance on the accuracy or compliance of financial statements with GAAP. Instead, it presents the financial information in the form of financial statements without any expression of opinion by the accounting firm. The report includes an introductory paragraph and emphasizes that no opinion or assurance is expressed. Both types of reports play a crucial role in providing financial information to various stakeholders, such as investors, lenders, regulators, and management. The Illinois Report from Review of Financial Statements and Illinois Report from Compilation of Financial Statements aim to enhance transparency, accountability, and confidence in the financial statements of entities operating in the state. Accounting firms in Illinois adhere to the guidelines and standards laid out by the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Standards Board (FAST), and the Illinois State Board of Accountancy to ensure the quality and integrity of their reports. These reports are vital tools for decision-making, risk assessment, and financial analysis within the state of Illinois.
