What is the difference between a preparation and compilation engagement?
In a preparation engagement, the accountant is literally preparing the financial statements based on information management provides (e.g. trial balances).
In a compilation engagement, management prepares the financial statements, and the accountant will read and help finalize the financial statements. The accountant is basically responsible for making sure the financial statements are in the appropriate format and free form obvious errors and misstatements.
For both engagements, independence is not required, and no assurance is provided.
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Is assurance provided in a preparation engagement?
No, the accountant doesn’t provide any assurance in a compilation engagement. Additionally, the accountant is not required to be independent, so it is probably a good thing that they aren’t providing any assurance.
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What is a preparation engagement under SSARS?
Preparation engagements offer prepared financial statements on behalf of the company. Basically, the accountant takes the financial information from the company and prepares the financial schedules for management. The financial statements do not need to state that they were performed by an external accountant. The accountant is not required to be independent in a preparation...
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What is a compilation engagement?
In a compilation engagement, the accountant basically reads the financial statements that were prepared by management and determine if they are appropriate in form and free from obvious material errors. Independence is not required in compilation engagements, however, if the practitioner is not independent, they must make that disclosure on every page of the compilation...
Is assurance provided in a preparation engagement?
No, the accountant doesn’t provide any assurance in a compilation engagement. Additionally, the accountant is not required to be independent, so it is probably a good thing that they aren’t providing any assurance.
What is a preparation engagement under SSARS?
Preparation engagements offer prepared financial statements on behalf of the company. Basically, the accountant takes the financial information from the company and prepares the financial schedules for management. The financial statements do not need to state that they were performed by an external accountant. The accountant is not required to be independent in a preparation...
What is a compilation engagement?
In a compilation engagement, the accountant basically reads the financial statements that were prepared by management and determine if they are appropriate in form and free from obvious material errors. Independence is not required in compilation engagements, however, if the practitioner is not independent, they must make that disclosure on every page of the compilation...
