A compilation requires the accounting firm to assembly the client’s bookkeeping information in a format acceptable to the American Institute of CPA’s  Standards for Accounting and Review Services. This service is not an audit and reflects no investigative work on the part of the CPA. No opinion on the accuracy of the data is offered, however, the reader is able to understand the figures presented due to a commonly acceptable format.

REVIEW
A review is a step up the ladder of service. Still not an audit, but a financial report, also in the format of the Standards of Accounting and Review services from the AICPA, but does entail a higher level of confidence of the accuracy of information presented.

The reader is told that the accountant has reviewed the financial information, applied analytical procedures and made inquiries of management as to its accuracy.

A reviewed financial statement consists of the same Statement of Assets, Liabilities and Owner’s Equity (or Balance Sheet) and Statement of Revenues and Expenses (or Profit and Loss). It may or may not include the Statement of Cash Flows and financial statement footnotes.

Depending upon the financial institution and the amount of money borrowed, a review level of service may be required.

In order to borrow funds for closely held business in today’s world, an annual financial statement is usually required by the lender, insurance company or brokerage firm.

COMPILATION
 A compilation is the simplest form of financial statement, consisting of a Statement of Assets, Liabilities and Owners’ Equity (or Balance Sheet) and a Statement of Revenues and Expenses (or Profit And Loss Statement). A compilation may or may not have a Statement of Cash Flows and footnotes. 

Compilations & Review Services