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.
The New Mexico Report from Review of Financial Statements and Compilation by Accounting Firm is a comprehensive document prepared by an accounting firm to provide a detailed analysis and assessment of the financial statements of a company or organization operating in the state of New Mexico. It serves as an important tool for investors, shareholders, and other stakeholders to evaluate the financial performance, stability, and credibility of the entity. The report consists of various sections that cover essential aspects of the financial statements, including the balance sheet, income statement, cash flow statement, and notes to the financial statements. Each section is thoroughly examined and reviewed by the accounting firm to ascertain the accuracy, completeness, and conformity with Generally Accepted Accounting Principles (GAAP) and other relevant accounting standards. Furthermore, the New Mexico Report from Review of Financial Statements and Compilation by Accounting Firm may include additional information and analysis to enhance the understanding of the financial position and performance. This can include discussions on significant accounting policies and estimates, management's discussion and analysis, and key financial ratios. The report often highlights any material departures from GAAP, potential risks, and uncertainties that could impact the entity's financial stability. There are two main types of reports that the accounting firm may issue based on their level of assurance: review report and compilation report. 1. Review Report: This type of report provides a moderate level of assurance. The accounting firm performs limited procedures such as inquiries and analytical procedures to assess the financial statements. The purpose of this report is to express a conclusion on whether any material modifications should be made to the financial statements for them to be in accordance with GAAP. 2. Compilation Report: This report is provided when the accounting firm assists in the preparation of the financial statements without expressing any assurance. The firm compiles the information provided by the company or organization, organizes it into the financial statement format, and discloses that no assurance is provided on the accuracy or conformity with GAAP. In conclusion, the New Mexico Report from Review of Financial Statements and Compilation by Accounting Firm is a vital document that aids in evaluating the financial health and performance of companies or organizations in the state. The report provides valuable insights into the entity's financial statements, ensuring transparency and enhancing investor confidence.
