Guide
Compilation or review: choosing the right financial statements.
Most private companies and non-profits need financial statements once a year. The question is which level your lender, investors or board actually require, because the work and cost are quite different.
Compilation engagements
A compilation is the most common choice for owner-managed companies. Under the Canadian standard (CSRS 4200), which replaced the Notice to Reader in December 2021, we compile your statements from your records and you review and approve them. No assurance is provided, and the statements disclose the basis of accounting used.
Review engagements
A review gives limited assurance. Under the Canadian standard (CSRE 2400), we perform inquiry and analytical procedures and issue a review engagement report. Reviews are usually prepared under Accounting Standards for Private Enterprises, or Accounting Standards for Not-for-Profit Organizations for non-profits.
Check your loan agreement, bonding requirements, shareholder agreement or funding agreements. If none of them require a review or an audit, a compilation is usually enough, and it costs less.
Who usually asks for statements
- Banks and lenders, often to check loan covenants
- Bonding companies, for contractors bidding on larger jobs
- Shareholders and investors
- Landlords for commercial leases
- Funders and members of non-profits and societies
How the process works
- Your books are brought up to date and reconciled
- We post year-end adjustments and prepare the statements and notes
- We discuss the results with you before anything is issued
- For corporations, the tax return is prepared from the same numbers
When you need an audit
Some lenders, larger non-profits and funding agreements require audited statements. We don't perform audits, but we can keep your books audit-ready and introduce you to partner firms that provide audit services.
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