Compilation of Financial StatementsThe Auditing and Assurance Board issued a new standard, ‘CSRS 4200 Compilation Engagements’ for the first time in almost 30 years! CSRS 4200 replaced Notice to reader report under Section 9200 engagements with Compilation engagement report. Section 9200 is still valid but only for the fiscal years ending before December 14, 2021. There is a lot of confusion surrounding ‘Notice to the reader’ under sec 9200 and CSRS 200 compilation engagements. Given the volume of questions from the clients, Non-CPA bookkeepers and other tax preparers, we discussed this matter with CPA Ontario’s practice advisory. Important: If you are a CPA or a Non-CPA, you must check the legal and other regulatory implications specific to your practice. CPA Canada’s CSRS 4200 implementation tool is available here.
Key information about CSRS 4200CSRS 4200 compilation engagements, no doubt, provide more transparency and a higher value to the users of the financial statements.
- There is a very clear definition of “Compilation engagement” under CSRS 4200.
- CSRS 4200 issues a report as ‘Compilation engagement report’ instead of ‘Notice to Reader’ under Sec 9200
- Management must make certain acknowledgements regarding the use of financial statements
- A note must be attached to the financial statements describing the basis of accounting. Previously the readers of financial statements were not able to identify the basis of accounting. It does not have to be general-purpose necessarily.
- CSRS 4200 requires minimum documentation at the practitioner’s end.
- CSRS 4200 is applicable for the periods ending on or after December 14, 2021. For the periods ending before December 14, 2021, either the compilation engagement report or Notice to the reader can be issued.
- Compilation engagement report now refers to the compliance with relevant ethical requirements. This makes it difficult for the Non-CPAs to perform these compilation engagements.
- The new report also refers to the responsibilities of both management and the practitioner.