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.
Maryland Report from Review of Financial Statements and Compilation by an Accounting Firm is a comprehensive document that provides in-depth analysis and evaluation of a company's financial statements. This report is prepared by an accounting firm licensed to operate in the state of Maryland, adhering to the generally accepted accounting principles (GAAP) and relevant auditing standards. The primary purpose of the Maryland Report from Review of Financial Statements and Compilation is to offer an independent and professional assessment of a company's financial health and performance. It provides valuable insights into the accuracy, reliability, and compliance of the financial statements with applicable accounting standards. Key elements of the report include: 1. Introduction: The report begins with an overview of the purpose and scope. It highlights the accounting firm's responsibilities and the management's responsibilities in preparing the financial statements. 2. Objectives: The report outlines the specific objectives of the review or compilation engagement. It clearly defines the tasks and procedures performed by the accounting firm during the assessment process. 3. Review Procedures: In a review engagement, the accounting firm performs analytical procedures, inquiries, and other limited procedures to obtain limited assurance that the financial statements are free from material misstatement. The report describes the nature and extent of these procedures. 4. Compilation Procedures: In a compilation engagement, the accounting firm gathers financial data from the company's management and compiles it into financial statements without providing any assurance. The report details the procedures followed in compilation, emphasizing that the financial statements have not been audited or reviewed. 5. Findings and Recommendations: The report presents the findings of the review or compilation engagement. It highlights any significant issues or non-compliance discovered during the assessment. Additionally, it may include recommendations for improving financial reporting processes and controls. Types of Maryland Reports from Review of Financial Statements and Compilation: 1. Maryland Review Report: This type of report is issued after a thorough review engagement. It provides limited assurance that the financial statements are free from material misstatement. The report outlines the procedures performed and the results of the review, helping stakeholders make informed decisions based on the financial information. 2. Maryland Compilation Report: This type of report is issued after a compilation engagement. It essentially presents the compiled financial statements prepared by the accounting firm based on the information provided by the management. The report emphasizes that no assurance is provided on the accuracy or compliance of the financial statements. In conclusion, the Maryland Report from Review of Financial Statements and Compilation by an Accounting Firm is a detailed document that provides valuable insights into a company's financial performance and compliance. It plays a crucial role in informing stakeholders, including investors, lenders, and regulatory bodies, about the financial health of the company.
