16 Dec What Will the New Compilation Report Look Like?
In our piece titled Regulatory Changes to Corporate Financial Statements at the end of 2021, we brought to your attention some changes to the way we will be required to prepare corporate financial statements. In this piece we are going to discuss one of those changes, the new Compilation Engagement Report, a bit further.
Starting at the end of 2021, we will be required to create a new report on financial statements that we help prepare, but that are not audited or reviewed (compiled financial statements).
This report will replace the old one that was titled Notice to Reader, often referred to as an NTR. The new report, to be attached to your compiled financial statements, more clearly describes your responsibilities as management, the responsibilities of Clearline as your accountant, and an explanation of the limitations of a compilation engagement. A sample of the new compilation engagement report is included below:
You will see that the new report specifically refers to a note (Note 1) that describes the basis of accounting used to prepare the financial statements. Previously, we published an article that explains the concept of a basis of accounting note and provides an example of one, which you can view here.
So, to summarize the above, starting at the end of 2021 financial statements that we prepare on your behalf, which are not audited or reviewed, will have the new Compilation Engagement Report in lieu of the old NTR report. The new report highlights some items that the old report did not but still states that the financial statements have been prepared without audit or review.
If you have any questions regarding anything discussed in this post or any other matter, please reach out to your contact at Clearline.