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.
Title: New Hampshire Report from Review of Financial Statements and Compilation by Accounting Firm: A Comprehensive Overview Introduction: In the state of New Hampshire, businesses and organizations often engage accounting firms to conduct different types of financial assessments, such as reviews of financial statements and compilations. These reports play a vital role in providing an objective analysis of financial data, ensuring transparency and accuracy for businesses, stakeholders, and regulatory authorities alike. Types of New Hampshire Reports from Review of Financial Statements and Compilation by Accounting Firm: 1. Review of Financial Statements: A "Review of Financial Statements" is a type of engagement where an accounting firm closely examines a financial statement and performs analytical procedures, making inquiries, and applying specific review procedures. The objective is to provide a level of assurance that the financial statements are free from material misstatements but do not offer absolute assurance. 2. Compilation of Financial Statements: A "Compilation of Financial Statements" involves the accounting firm using the client's data to prepare financial statements without verifying the accuracy or completeness of the underlying information. Accountants organize and present the financial data into the required format, adhering to the applicable financial reporting framework. Components of a New Hampshire Report from Review of Financial Statements and Compilation: 1. Independent Accountant's Report: Both the Review and Compilation reports begin with an "Independent Accountant's Report." This section outlines the accounting firm's responsibility, the scope of the engagement, and the standards followed during the review or compilation process. It also highlights that these engagements differ from audits in terms of the level of assurance provided. 2. Management's Responsibility: Next, the report details the management's responsibility for the financial statements. It emphasizes that management is responsible for maintaining accurate record keeping, preparing financial statements, and selecting appropriate accounting policies to comply with relevant frameworks. 3. Review or Compilation Procedures: This section differentiates between a Review and a Compilation engagement. For a Review report, it outlines the procedures performed, including analytical analyses, inquiry of management, and assessment of financial statement presentation. In the Compilation report, it mentions the procedures of organizing, classifying, and presenting the financial statements based on information provided by management. 4. Findings and Conclusion: In the Review report, the accounting firm presents its findings, noting any issues or concerns identified during the review process. However, since the report only provides limited assurance, no formal opinion is expressed. In contrast, the Compilation report typically does not include findings or express any assurance as it presents financial statements based on management's records without verification. 5. Supplementary Information (if applicable): If there are any supplementary schedules or information accompanying the financial statements, the report may include a section addressing the accounting firm's responsibilities or lack thereof concerning that additional information. Conclusion: New Hampshire Reports from Review of Financial Statements and Compilation by Accounting Firms serve as critical tools in ensuring financial transparency and assisting businesses in making informed decisions. These reports offer varying levels of assurance, with Review reports providing limited assurance and Compilation reports presenting financial statements solely based on management's records. Proper understanding and utilization of these reports are vital for businesses, investors, and regulatory authorities who rely upon accurate financial information.
