What Is a Compilation?

If you have ever applied for a business loan, sought outside investment, or needed to present your financials to a third party, you may have been asked for financial statements prepared by a licensed CPA. One of the most common and affordable options is a compilation engagement. Here is what that means and when you might need one.

What Is a Compilation? A compilation is a type of financial statement engagement where a licensed CPA takes financial information provided by a business and presents it in a structured, professional format. The CPA does not verify or audit the information — they organize and present it according to Canadian accounting standards.

The result is a formal set of financial statements, typically including:

• A statement of financial position (balance sheet)

• A statement of income

• A statement of cash flows (in some cases)

• Notes to the financial statements

How Is It Different From an Audit or Review? There are three levels of financial statement engagements in Canada:

• Compilation — The lowest level. The CPA presents the information provided without providing assurance. Most affordable option.

• Review — The CPA performs analytical procedures and inquiries to provide limited assurance that the statements are plausible.

• Audit — The highest level. The CPA independently verifies financial information and provides a formal opinion. Required for publicly traded companies and some larger organizations.

For most small businesses, a compilation is sufficient.

When Do You Need a Compilation? You may need a compilation if:

• A bank or lender requires formal financial statements as part of a loan application

• You are bringing in a business partner or investor

• You need to present your financials to a landlord or supplier

• You want a clear, professional summary of your business finances

Why Use a Licensed CPA? In Canada, compilation engagements must be prepared by a licensed CPA. Working with a qualified professional ensures your statements meet Canadian standards and are taken seriously by banks and other parties.

FAB Tax CPA prepares compilation engagements for small businesses in Houston, BC and the surrounding Bulkley Valley area. Contact us to learn more.