The Canadian Auditing and Assurance Standards Board has released new guidelines (CSRS 4200 Compilation Engagements) for preparing corporate financial statements – the first such revisions in more than 30 years. These changes update and strengthen existing requirements for accepting, conducting and reporting on compilation engagements (financial statements prepared by a certified public accountant). The new standard is effective for periods ending on or after December 14, 2021, and applies to all users of compiled financial information. Under the new requirements, financial statements will include additional information outlining management’s responsibilities, the practitioner’s responsibilities, and an expanded explanation of the limitations of the compiled financial information. As well, corporate financial information is sometimes requested by third parties. Lenders, for example, may use this information when granting loans or extending credit to small and mid-sized companies. The new standard focuses on providing data that will meet their needs and objectives. Key changes to the standard include:
A redefinition of the scope of professional accounting services that distinguishes between compilation engagements, audit engagements, review engagements and bookkeeping services;
A required note that describes the basis of accounting applied, to help users understand how the compiled financial information was prepared;
More transparency about the responsibilities of the practitioner and the extent of work performed; and
A statement of the minimum documentation and work required, to ensure consistency by practitioners.
We look forward to implementing these new standards as we work together with you to fulfil your financial reporting needs.