Compilations

The objective of the accountant in a compilation engagement is to apply accounting and financial reporting expertise to assist management in the presentation of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for them to be in accordance with the applicable financial reporting framework.

At Sawyer Assurance, we have designed our Compilation process to be highly efficient and to produce a high-quality product.

FREQUENTLY ASKED QUESTIONS

What is a financial statement compilation?

Where an Accountant helps a Client put its financial records into a financial statement format that is in compliance with its financial reporting framework (e.g., GAAP).

What procedures are performed in the financial statement compilation process?

First an Engagement Letter is prepared by the Accountant and signed by the Client. Then, the Accountant reads the Client's financial statements and determines whether they appear to be appropriate in form and free from obvious material misstatements. If the Accountant becomes aware that the financial statements are inaccurate or incomplete, the Accountant will bring it to the attention of the Client and request that it be corrected. After all corrections are made, the Accountant prepares a Compilation Report that is attached to the financial statements. The Client can then provide this Compilation Report and financial statements to its stakeholders.

STANDARDS

Introduction to Performing Financial Statement Compilation Engagements

Statements on Standards for Accounting and Review Services (SSARSs) are issued by the AICPA Accounting and Review Services Committee (ARSC). Those standards relevant to financial statement compilations are as follows:

AR-C Section 60A: General Principles for Engagements Performed in Accordance with Statements on Standards for Accounting and Review Services

AR-C Section 80: Compilation Engagements

AR-C Section 120: Compilation of Pro Forma Financial Information

AR-C Section 60A.01-06: General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services

"Introduction

Scope of This Section

.01 This section provides general principles for engagements performed in accordance with Statements on Standards for Accounting and Review Services (SSARSs) issued by the Accounting and Review Services Committee (ARSC) and codified into AR-C sections. This section also sets forth the meaning of certain terms used in SSARSs when describing the professional requirements imposed on accountants performing an engagement in accordance with SSARSs. [As amended, effective October 2016, by SSARS No. 23.]

.02 This section is intended to help accountants better understand their professional responsibilities when performing an engagement in accordance with SSARSs. Additional sections have been established to set forth specific performance and reporting requirements. Such additional requirements are based on the general principles provided by this section, and any requirements created by this section also have been incorporated into the additional sections.

.03 SSARSs do not address the responsibilities of the accountant that may exist in legislation, regulation, or otherwise. Such responsibilities may differ from those established in SSARSs. Accordingly, although the accountant may find aspects of SSARSs helpful in such circumstances, it is the responsibility of the accountant to ensure compliance with all relevant legal, regulatory, or professional obligations. [As amended, effective October 2016, by SSARS No. 23.]

.04 The financial statements subject to the engagement performed in accordance with SSARSs are those of the entity. SSARSs do not impose responsibilities on management and do not override laws and regulations that govern their responsibilities. (Ref: par. .A4–.A11) [Paragraph renumbered and amended, effective October 2016, by SSARS No. 23.]

Effective Date

.05 This section is effective for engagements performed in accordance with SSARSs for periods ending on or after December 15, 2015. Early implementation is permitted. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

Objective

.06 The objective of the accountant is to obtain an understanding of the general principles for engagements performed in accordance with SSARSs. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 60A.08: Ethical Requirements

".08 The accountant should comply with relevant ethical requirements. (Ref: par. .A13–.A16)"

AR-C Section 60A.09: Professional Judgment

".09 The accountant should exercise professional judgment in the performance of an engagement in accordance with SSARSs. (Ref: par. .A17–.A21)"

AR-C Section 60A.10-13: Complying with AR-C Sections Relevant to the Engagement

"Conduct of the Engagement in Accordance With SSARSs

.10 The accountant must perform a review, compilation, or an engagement to prepare financial statements in accordance with SSARSs, except for certain reviews of interim financial information as discussed in section 90, Review of Financial Statements.

Complying With AR-C Sections Relevant to the Engagement

.11 The accountant should comply with all AR-C sections relevant to the engagement. An AR-C section is relevant to the engagement when the AR-C section is in effect, and the circumstances addressed by the AR-C section exist. (Ref: par. .A22–.A27)

.12 The accountant should have an understanding of the entire text of an AR-C section, including its application and other explanatory material, to understand its objectives and apply its requirements properly. (Ref: par. .A28– .A32)

.13 An accountant should not represent compliance with SSARSs in the accountant's compilation or review report unless the accountant has complied with the requirements of this section and all other AR-C sections relevant to the engagement."

AR-C Section 60A.14-19: Complying with Relevant SSARS Requirements

"Complying With Relevant Requirements

.14 Subject to paragraph .16, the accountant should comply with each requirement of the relevant AR-C section unless, in the circumstances of the engagement, the requirement is not relevant because it is conditional, and the condition does not exist. (Ref: par. .A33)

Defining Professional Responsibilities in SSARSs

.15 SSARSs use the following two categories of professional requirements, identified by specific terms, to describe the degree of responsibility they impose on accountants:

• Unconditional requirements. The accountant must comply with an unconditional requirement in all cases in which such requirement is relevant. SSARSs use the word "must" to indicate an unconditional requirement.

• Presumptively mandatory requirements. The accountant must comply with a presumptively mandatory requirement in all cases in which such a requirement is relevant, except in rare circumstances discussed in paragraph .16. SSARSs use the word "should" to indicate a presumptively mandatory requirement. (Ref: par. .A34)

.16 In rare circumstances, the accountant may judge it necessary to depart from a relevant presumptively mandatory requirement. In such circumstances, the accountant should perform alternative procedures to achieve the intent of the requirement. The need for an accountant to depart from a relevant, presumptively mandatory requirement is expected to arise only when the requirement is for a specific procedure to be performed and, in the specific circumstances of the engagement, that procedure would be ineffective in achieving the intent of the requirement.

.17 If, in rare circumstances, the accountant judges it necessary to depart from a relevant presumptively mandatory requirement, the accountant must document the justification for the departure and how the alternative procedures performed in the circumstances were sufficient to achieve the intent of that requirement. [Paragraph added, effective October 2016, by SSARS No. 23.]

Interpretive Publications

.18 The accountant should consider applicable interpretive publications in the performance of an engagement in accordance with SSARSs. (Ref: par. .A35) [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

Other Preparation, Compilation and Review Publications

.19 In applying the guidance included in an other preparation, compilation and review publication, the accountant should, exercising professional judgment, assess the relevance and appropriateness of such guidance to the circumstances of the engagement. (Ref: par. .A36–.A38) [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 60A.20-24: Engagement Level Quality Control under SSARS

".20 In an engagement performed in accordance with SSARSs, the engagement partner should possess the competence and capabilities to perform the engagement and competence in financial reporting, appropriate to the engagement circumstances. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.21 In an engagement performed in accordance with SSARSs, the engagement partner should take responsibility for the following: (Ref: par. .A39–.A42)

a. The overall quality of each engagement to which that partner is assigned

b. The direction, supervision, planning and performance of the engagement in compliance with professional standards and applicable legal and regulatory requirements (Ref: par. .A43)

c. The accountant's report being appropriate in the circumstances

d. The engagement being performed in accordance with the firm's quality control policies and procedures, including the following:

i. Being satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and engagements have been followed, and that conclusions reached are appropriate, including considering whether there is information that would lead the engagement partner to conclude that management lacks integrity (Ref: par. .A44–.A45)

ii. Being satisfied that the engagement team collectively has the appropriate competence and capabilities to perform the engagement and expertise in financial reporting to

(1) perform the engagement in accordance with professional standards and applicable legal and regulatory requirements and

(2) enable a report that is appropriate in the circumstances to be issued, if applicable

iii. Taking responsibility for appropriate engagement documentation being maintained. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

Relevant Considerations After Engagement Acceptance

.22 If the engagement partner obtains information that would have caused the firm to decline the engagement had that information been available earlier, the engagement partner should communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

Compliance With Relevant Ethical Requirements

.23 Throughout the engagement, the engagement partner should remain alert, through observation and making inquiries as necessary, for evidence of noncompliance with relevant ethical requirements by members of the engagement team. If matters come to the engagement partner's attention through the firm's system of quality control or otherwise that indicate that members of the engagement team have not complied with relevant ethical requirements, the engagement partner, in consultation with others in the firm, should determine the appropriate action. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

Monitoring

.24 An effective system of quality control for a firm includes a monitoring process designed to provide the firm with reasonable assurance that the firm's policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively. The engagement partner should consider the results of the firm's monitoring process as evidenced in the latest information circulated by the firm and, if applicable, other network firms and whether deficiencies noted in that information may affect the engagement. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 60A.25-26: Acceptance and Continuance of Client Relationships and Engagements

".25 The accountant should not accept an engagement to be performed in accordance with SSARSs if (Ref: par. .A46)

a. the accountant has reason to believe that relevant ethical requirements will not be satisfied; (Ref: par. .A47)

b. the accountant's preliminary understanding of the engagement circumstances indicates that information needed to perform the engagement is likely to be unavailable or unreliable; or (Ref: par. .A48)

c. the accountant has cause to doubt management's integrity such that it is likely to affect the performance of the engagement. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.26 As a precondition for accepting an engagement to be performed in accordance with SSARSs, the accountant should

a. determine whether preliminary knowledge of the engagement circumstances indicate that ethical requirements regarding professional competence will be satisfied.

b. determine whether the financial reporting framework selected by management to be applied in the preparation of the financial statements is acceptable. (Ref: par. .A49)

c. obtain the agreement of management that it acknowledges and understands its responsibility (Ref: par. .A50)

i. for the selection of the financial reporting framework to be applied in the preparation of financial statements.

ii. for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error, unless the accountant decides to accept responsibility for such internal control.

iii. for preventing and detecting fraud.

iv. for ensuring that the entity complies with laws and regulations applicable to its activities.

v. for the accuracy and completeness of the records, documents, explanations, and other information, including significant judgments provided by management for the preparation of financial statements.

vi. to provide the accountant with (Ref: par. .A51)

(1) access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters.

(2) additional information that the accountant may request from management for the purpose of the engagement.

(3) unrestricted access to persons within the entity of whom the accountant determines it necessary to make inquiries. [Paragraph renumbered and amended, effective October 2016, by SSARS No. 23.]"

AR-C Section 80.01-04: Compilation Engagements - Introduction and Objectives

"Introduction

Scope of This Section

.01 This section applies when the accountant is engaged to perform a compilation of financial statements, prospective financial information, pro forma financial information, or other historical financial information. (Ref: par. .A1– .A4). [As amended, effective for compilation reports on prospective financial information dated on or after May 1, 2017, by SSARS No. 23.]

The Compilation Engagement

.02 Because a compilation engagement is not an assurance engagement, a compilation engagement does not require the accountant to verify the accuracy or completeness of the information provided by management or otherwise gather evidence to express an opinion or a conclusion on the financial statements.

Effective Date

.03 This section is effective for compilations of financial statements for periods ending on or after December 15, 2015. Early implementation is permitted.

Objective

.04 The objective of the accountant in a compilation engagement is to apply accounting and financial reporting expertise to assist management in the presentation of financial statements and report in accordance with this section without, undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for them to be in accordance with the applicable financial reporting framework."

AR-C Section 80.06-07: Independence

"General Principles for Performing and Reporting on Compilation Engagements

.06 In addition to complying with this section, an accountant is required to comply with section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services.

Independence

.07 The accountant must determine whether the accountant is independent of the entity. (Ref: par. .A8)"

AR-C Section 80.08-09: Acceptance and Continuance of Client Relationships and Compilation Engagements

".08 As a condition for accepting an engagement to perform a compilation with respect to an entity's financial statements, in addition to the requirements in paragraph .26 of section 60, the accountant should obtain the agreement of management that it acknowledges and understands its responsibility

a. for the preparation and fair presentation of financial statements in accordance with the applicable financial reporting framework and the inclusion of all informative disclosures that are appropriate for the applicable financial reporting framework used to prepare the entity's financial statements. If the financial statements are prepared in accordance with a special purpose framework, this includes (Ref: par. .A9)

i. a description of the special purpose framework, including a summary of significant accounting policies, and how the framework differs from GAAP, the effect of which need not be quantified, and informative disclosures similar to those required by GAAP, in the case of special purpose financial statements that contain items that are the same as, or similar to, those in financial statements prepared in accordance with GAAP, (Ref: par. .A28)

ii. a description of any significant interpretations of the contract on which the special purpose financial statements are prepared, in the case of financial statements prepared in accordance with a contractual basis of accounting, and

iii. additional disclosures beyond those specifically required by the framework that may be necessary for the special purpose framework to achieve fair presentation.

b. to include the accountant's compilation report in any document containing financial statements that indicates that the entity's accountant has performed a compilation engagement on such financial statements unless a different understanding is reached. (Ref: par. .A10)

.09 If the accountant is not satisfied about any of the matters set out in paragraph .26 of section 60 or paragraph .08 of this section as preconditions for accepting a compilation engagement, the accountant should discuss the matter with management or those charged with governance. If changes cannot be made to satisfy the accountant about those matters, the accountant should not accept the proposed engagement."

AR-C Section 80.10-11: Agreement on Engagement Terms

".10 The accountant should agree upon the terms of the engagement with management or those charged with governance, as appropriate. The agreed-upon terms of the engagement should be documented in an engagement letter or other suitable form of written agreement between the parties and should include the following: (Ref: par. .A11–.A16)

a. The objectives of the engagement

b. The responsibilities of management set forth in paragraph .26c of section 60 and paragraph .08 of this section

c. The responsibilities of the accountant

d. The limitations of the compilation engagement

e. Identification of the applicable financial reporting framework for the preparation of the financial statements

f. The expected form and content of the accountant's compilation report and a statement that there may be circumstances in which the report may differ from its expected form and content [As amended, effective October 2016, by SSARS No. 23.]

.11 The engagement letter or other suitable form of written agreement should be signed by

a. the accountant or the accountant's firm and

b. management or those charged with governance, as appropriate. (Ref: par. .A12)"

AR-C Section 80.12-16: Compilation Procedures

"The Accountant’s Knowledge and Understanding of the Entity’s Financial Reporting Framework

.12 The accountant should obtain an understanding of the applicable financial reporting framework and the significant accounting policies intended to be used in the preparation of the financial statements. (Ref: par. .A17)

Compilation Procedures

.13 The accountant should read the financial statements in light of the accountant's understanding of the applicable financial reporting framework and the significant accounting policies adopted by management and consider whether such financial statements appear to be appropriate in form and free from obvious material misstatements.

.14 If, in the course of the engagement, the accountant becomes aware that the records, documents, explanations, or other information, including significant judgments, provided by management are incomplete, inaccurate, or otherwise unsatisfactory, the accountant should bring that to the attention of management and request additional or corrected information. (Ref: par. .A18)

.15 If the accountant becomes aware during the course of the engagement that

a. the financial statements do not adequately refer to or describe the applicable financial reporting framework (Ref: par. .A19);

b. revisions to the financial statements are required for the financial statements to be in accordance with the applicable financial reporting framework; or

c. the financial statements are otherwise misleading (Ref: par. .A20– .A21) the accountant should propose the appropriate revisions to management.

.16 The accountant should withdraw from the engagement and inform management of the reasons for withdrawing if (Ref: par. .A22–.A23)

a. the accountant is unable to complete the engagement because management has failed to provide records, documents, explanations, or other information, including significant judgments, as requested, or

b. management does not make appropriate revisions that are proposed by the accountant or does not disclose such departures in the financial statements, and the accountant determines to not disclose such departures in the accountant's compilation report."

AR-C Section 80.17: The Accountant's Compilation Report (General Inclusions)

".17 The accountant's compilation report should be in writing and (Ref: par. .A24 and .A27)

a. include a statement that management (owners) is (are) responsible for the financial statements.

b. identify the financial statements that have been subjected to the compilation engagement.

c. identify the entity whose financial statements have been subjected to the compilation engagement.

d. specify the date or period covered by the financial statements.

e. include a statement that the accountant performed the compilation engagement in accordance with SSARSs promulgated by the Accounting and Review Services Committee of the AICPA.

f. include a statement that the accountant did not audit or review the financial statements nor was the accountant required to perform any procedures to verify the accuracy or completeness of the information provided by management and does not express an opinion, a conclusion, nor provide any assurance on the financial statements.

g. include the signature of the accountant or the accountant's firm.

h. include the city and state where the accountant practices. (Ref: par. .A26)

i. include the date of the report, which should be the date that the accountant has completed the procedures required by this section.

[Revised, October 2016, to reflect conforming changes necessary due to the issuance of SSARS No. 23.]"

AR- C Section 80.18-21: The Accountant's Compilation Report (When the Financial Statements are Prepared in Accordance with a Special Purpose Framework)

".18 Unless the entity elects to omit substantially all disclosures, the accountant should modify the compilation report when that accountant becomes aware that the financial statements do not include

a. a description of the special purpose framework. (Ref: par. .A28)

b. a summary of significant accounting policies. (Ref: par. .A29)

c. an adequate description about how the special purpose framework differs from GAAP. The effects of these differences need not be quantified. (Ref: par. .A28)

d. informative disclosures similar to those required by GAAP when the financial statements contain items that are the same as, or similar to, those in financial statements prepared in accordance with GAAP. (Ref: par. .A31)

.19 In the case of financial statements prepared in accordance with a contractual basis of accounting, the accountant should modify the compilation report if the financial statements do not adequately describe any significant interpretations of the contract on which the financial statements are based.

.20 The accountant's compilation report on financial statements prepared in accordance with a special purpose framework should

a. make reference to management's responsibility for determining that the applicable financial reporting framework is acceptable in the circumstances when management has a choice of financial reporting frameworks in the preparation of such financial statements.

b. describe the purpose for which the financial statements are prepared or refer to a note in the financial statements that contains that information when the financial statements are prepared in accordance with a regulatory or contractual basis of accounting. (Ref: par. .A32)

.21 The accountant's compilation report on financial statements prepared in accordance with a special purpose framework should include a separate paragraph that

a. indicates that the financial statements are prepared in accordance with the applicable special purpose framework,

b. refers to the note to the financial statements that describes the framework, if applicable, and

c. states that the special purpose framework is a basis of accounting other than GAAP."

AR-C Section 80.22-23: The Accountant's Compilation Report (When Independence is Impaired)

".22 When the accountant is not independent with respect to the entity, the accountant should indicate the accountant's lack of independence in a final paragraph of the accountant's compilation report. (Ref: par. .A33–.A35)

.23 If the accountant elects to disclose a description about the reasons the accountant's independence is impaired, the accountant should include all such reasons in the description."

AR-C Section 80.24-28: The Accountant's Compilation Report (When Management Elects to Omit Substantially All Disclosures Required by the Financial Reporting Framework)

".24 The summary of significant assumptions is essential to the user's understanding of prospective financial information. Accordingly, the accountant should not issue a compilation report on prospective financial information that excludes disclosure of the summary of significant assumptions. Also, the accountant should not issue a compilation report on a financial projection that excludes either

(a) an identification of the hypothetical assumptions or

(b) a description of the limitations on the usefulness of the presentation. [Paragraph added, effective for compilation reports on prospective financial information dated on or after May 1, 2017, by SSARS No. 23.]

.25 In addition to the reporting elements required by paragraph .17, an accountant's compilation report on prospective financial information should include statements that

a. the forecasted or projected results may not be achieved and

b. the accountant assumes no responsibility to update the report for events and circumstances occurring after the date of the report.

[Paragraph added, effective for compilation reports on prospective financial information dated on or after May 1, 2017, by SSARS No. 23.]

.26 The accountant should not issue an accountant's compilation report on financial statements that omit substantially all disclosures required by the applicable financial reporting framework unless the omission of substantially all disclosures is not, to the accountant's knowledge, undertaken with the intention of misleading those who might reasonably be expected to use such financial statements. (Ref: par. .A21) [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.27 When reporting on financial statements that omit substantially all disclosures required by the applicable financial reporting framework, the accountant should include a separate paragraph in the accountant's compilation report that includes the following elements: (Ref: par. .A36–.A37)

a. A statement that management has elected to omit substantially all the disclosures (and the statement of cash flows, if applicable) required by the applicable financial reporting framework (or ordinarily included in the financial statements if the financial statements are prepared in accordance with a special purpose framework)

b. A statement that if the omitted disclosures (and the statement of cash flows, if applicable) were included in the financial statements, they might influence the user's conclusions about the entity's financial position, results of operations, and cash flows (or the equivalent for presentations other than GAAP)

c. A statement that, accordingly, the financial statements are not designed for those who are not informed about such matters

[Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.28 The omission of one or more notes, when substantially all other disclosures are presented, should be treated in a compilation report like any other departure from the applicable financial reporting framework, and the nature of the departure and its effects, if known, should be disclosed in accordance with paragraphs .29–.33. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 80.29-33: The Accountant's Compilation Report (When Reporting Known Departures from the Applicable Financial Reporting Framework)

".29 When the accountant becomes aware of a departure from the applicable financial reporting framework (including inadequate disclosure) that is material to the financial statements and the financial statements are not revised, the accountant should consider whether modification of the standard report is adequate to disclose the departure. (Ref: par. .A39) [Paragraph renumbered and amended, effective October 2016, by SSARS No. 23.]

.30 If the accountant concludes that modification of the standard report is adequate, the departure should be disclosed in a separate paragraph of the report. The effects of the departure on the financial statements should be disclosed if such effects have been determined by management or are readily known to the accountant as the result of the accountant's procedures. [Paragraph renumbered and amended, by SSARS No. 23, October 2016.]

.31 If the effects of the departure have not been determined by management or are not readily known to the accountant as a result of the accountant's procedures, the accountant is not required to determine the effects of a departure; however, in such circumstances, the accountant should state in the report that such determination has not been made by management. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.32 If the accountant believes that modification of the compilation report is not adequate to indicate the deficiencies in the financial statements as a whole, the accountant should withdraw from the engagement and provide no further services with respect to those financial statements. (Ref: par. .A23) [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.33 The accountant should not modify the compilation report to include a statement that the financial statements are not in conformity with the applicable financial reporting framework. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 80.34-36: The Accountant's Compilation Report (When Supplementary Information Accompanies the Financial Statements)

".34 When supplementary information accompanies financial statements and the accountant's compilation report thereon, the accountant should clearly indicate the degree of responsibility, if any, the accountant is taking with respect to such information in either

a. a separate paragraph in the accountant's compilation report on the financial statements or

b. a separate report on the supplementary information. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016. Revised, October 2016, to reflect conforming changes necessary due to the issuance of SSARS No. 23.]

.35 When the accountant has performed a compilation engagement with respect to both the financial statements and the supplementary information, the accountant should include a separate paragraph in the accountant's compilation report on the financial statements or issue a separate report on the supplementary information that states (Ref: par. .A41 and .A43)

a. the supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements;

b. the supplementary information is the responsibility of management;

c. the supplementary information was subject to the compilation engagement; and

d. the accountant has not audited or reviewed the supplementary information and does not express an opinion, a conclusion, nor provide any assurance on such information. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016. Revised, October 2016, to reflect conforming changes necessary due to the issuance of SSARS No. 23.]

.36 When the accountant has performed a compilation engagement with respect to the financial statements but the supplementary information was not subject to the compilation engagement, the accountant should include a separate paragraph in the accountant's compilation report on the financial statements or issue a separate report on the supplementary information that states (Ref: par. .A42–.A43)

a. the supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements;

b. the supplementary information is the responsibility of management; and

c. the supplementary information was not subject to the compilation engagement and the accountant does not express an opinion, a conclusion, nor provide any assurance on such information. [Paragraph renumbered by the issuance of SSARS No. 23, October 2016. Revised, October 2016, to reflect conforming changes necessary due to the issuance of SSARS No. 23.]"

AR-C Section 80.37-39: The Accountant's Compilation Report (When Required Supplementary Information Accompanies the Financial Statements)

".37 With regard to the requirement in paragraph .34, with respect to required supplementary information, the accountant should include a separate paragraph in the accountant's compilation report on the financial statements. The other-matter paragraph should include language to explain the following circumstances, as applicable: (Ref: par. .A44)

a. The required supplementary information is included, and the accountant performed a compilation engagement on the required supplementary information.

b. The required supplementary information is included, and the accountant did not perform a compilation, review, or audit on the required supplementary information.

c. The required supplementary information is omitted.

d. Some required supplementary information is missing, and some is presented in accordance with the prescribed guidelines. (Ref: par. .A45)

e. The accountant has identified departures from the prescribed guidelines.

f. The accountant has unresolved doubts about whether the required supplementary information is presented in accordance with prescribed guidelines.

[Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]

.38 If the entity has presented all or some of the required supplementary information and the accountant did not perform a compilation engagement on the required supplementary information, the separate paragraph in the accountant's compilation report referred to in paragraph .34 should include the following elements: (Ref: par. .A46)

a. A statement that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] requires that the [identify the required supplementary information] be presented to supplement the basic financial statements

b. A statement that such information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context

c. A statement that the accountant did not perform a compilation, review, or audit on the required supplementary information and does not express an opinion, a conclusion, nor provide any assurance on the information

d. If some of the required supplementary information is omitted:

i. A statement that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] require to be presented to supplement the basic financial statements

ii. A statement that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context

e. If the measurement or presentation of the required supplementary information departs materially from the prescribed guidelines, a statement that material departures from prescribed guidelines exist [describe the material departures from the applicable financial reporting framework]

f. If the accountant has unresolved doubts about whether the required supplementary information is measured or presented in accordance with prescribed guidelines, a statement that the accountant has doubts about whether material modifications should be made to the required supplementary information for it to be presented in accordance with guidelines established by [identify designated accounting standards-setter]

[Paragraph renumbered by the issuance of SSARS No. 23, October 2016. Revised, October 2016, to reflect conforming changes necessary due to the issuance of SSARS No. 23.]

.39 If all the required supplementary information is omitted, the separate paragraph in the accountant's compilation report should include the following elements:

a. A statement that management has omitted [description of the missing required supplementary information] that [identify the applicable financial reporting framework (for example, accounting principles generally accepted in the United States of America)] require to be presented to supplement the basic financial statements

b. A statement that such missing information, although not a part of the basic financial statements, is required by [identify designated accounting standards-setter], who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context [Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 80.40: Documentation in a Compilation Engagement

".40 The accountant should prepare documentation in connection with each compilation engagement in sufficient detail to provide a clear understanding of the work performed which, at a minimum, includes the following:

a. The engagement letter or other suitable form of written documentation with management, as described in paragraphs .10–.11 (Ref: par. .A14 and .A16)

b. A copy of the financial statements

c. A copy of the accountant's report

[Paragraph renumbered by the issuance of SSARS No. 23, October 2016.]"

AR-C Section 120: Compilation of Pro Forma Financial Information

"Scope of This Section

.01 This section contains performance and reporting requirements and application guidance for accountants engaged to perform a compilation engagement on pro forma financial information. (Ref: par. .A1)

Objective

.03 The objective of the accountant in a compilation of pro forma financial information is to apply accounting and financial reporting expertise to assist management in the presentation of pro forma financial information and report in accordance with this section without undertaking to obtain or provide any assurance on the pro forma financial information."