Compilation Services

by Maohong Wong

According to SSARS (Statements on Standards for Accounting and Review Services), compilation services are when accountants help management prepare their financial statements without providing any assurances that the financial information is in accordance with GAAP (Generally Accepted Accounting Principles). Companies hire CPA (Certified Public Accounting) firms to compile their financial statements. The CPAs transfer financial data provided by the clients into financial statements without providing any assurances.


CPAs need to have an understanding with their clients through an engagement letter. The purpose of the engagement letter is to state the terms of engagements which includes classifying the compilation as an engagement that differs from other attestation services. First, CPAs should familiarize themselves with the client’s industry, the client’s organization, and the accounting principles and standards. Then, they should provide the limitations on the use of the financial statements, which must be documented through written communications. The compiled financial statements may be used for management and third-parties, depending on the specified arrangement. If the statements are for management, the financial statements should include an indication- “Restricted for management’s use only” and the accountants do not need to provide the compilation report. Otherwise, they should provide the report. Meanwhile, the CPAs are not required to be independent of the compilat ion services, but lack of independence requires disclosure.


The CPAs may issue three scenarios of compilation reports. First, if management conceals some financial information that GAAP requires to be disclosed, and that the financial information may influence the financial statement users’ decision. Second, the CPAs are not independent while conducting the services. Lastly, the CPAs complete financial statements will all disclosures in accordance with GAAP.

 In the end, the compilation services do not guarantee that the financial statements are free of material mistakes, and management is responsible for its own financial information.

However, if the accountant finds misleading, incorrect, erroneous or incomplete information in the financial statements, the accountant should obtain additional information to confirm, deny or clarify this from management. If the accountant is unable to obtain this information from management, the accountant should withdraw from the engagement.


Maohong Wang-Master's Degree in Accounting Student at Naveen Jindal School of Management

and is in the 2017 mentoring program at IAA CPA FIRM PLLC



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