Compilation Engagement (PSRS 4410)
Compilation vs. Audit
reducing detailed data into a
manageable and understandable
form. Compilation is also to be done
in compliance with the applicable
financial reporting framework.
 Benefit is derived from the exercise of
professional competence and due
care.
o Segue the involvement of
compliance with code of
ethics
for
professional
accountants
o Independence is not a
requirement
 Report should be issued if the name
of the accountant is to be associated
with the financial information.
The Compilation and its Connection with
PSQC 1 and Quality Control
The Compilation Engagement
 A
compilation
involves
the
preparation of financial statements
from the accounting records and
other representations of the client.
 Use of CPA’s expertise in accounting
and financial reporting in with PAS
and PFRS.
 Not an assurance engagement for
the practitioner is in no way required
to verify accuracy/completeness nor
review the information compiled.
Objective of a Compilation Engagement
 For the accountant to use accounting
expertise to collect, classify, and
summarize financial information and
 PSRS 4410 was based off of PSQC
1’s requirements regarding
 HEALME
 Policies and procedures designed to
achieve the objective of the QC
System
o Firm and personnel must
comply with applicable legal
and regulatory requirements
o Issuance
of
appropriate
reports in the circumstances
Objectives of the practitioner
 Apply accounting and financial
reporting
expertise
to
assist
management in the preparation and
presentation of financial information
in accordance with the applicable
financial reporting framework.
 To report according to what is
required by PSRS 4410.
Applicable Financial Reporting Framework
 The financial reporting framework
adopted by management or those
charged with governance where
appropriate that is acceptable
considering:
o Nature of the entity
o Objective of the information
as required by law or
regulation
Professional judgment
 Professional judgment is to be
exercise
in
conducting
the
compilation engagement
 Involves the application of relevant
training, knowledge and experience,
within the context provided by this
PSRS and accounting and ethical
standards, in making informed
decisions about the courses of action
that
are
appropriate
in
the
circumstances of the compilation
engagement.
 Instances
where
professional
judgment is needed in connection
with AFRFW.
o Selection
of
accounting
policies
o Accounting estimates
Engagement Acceptance and Continuance
Practitioner shall not accept engagement
unless the following have been agreed with
management or engaging party:
 Use and distribution of financial
information and its restrictions on
use/distribution, if any.
 Identification of applicable FRFW
 Objective/scope
of
compilation
agreement
 Responsibilities of practitioner
o Includes compliance with
relevant eth. Requirements
 Responsibilities of management
o Financial info and its P/P in
accordance with AFRFW.
o Accuracy and completeness
of records, etc.
o
Judgments
needed
in
prepared financial information
 Form/content of auditor’s report
Engagement letter confirms the practitioner’s
acceptance of the engagement and confirms
such matters as:
• The objectives and scope of the
engagement, including the understanding of
the parties to the engagement that the
engagement
is
not
an
assurance
engagement.
• The intended use and distribution of the
financial information, and any restrictions on
its use or distribution (where applicable).
• The responsibilities of management in
relation to the compilation engagement.
• The extent of the practitioner’s
responsibilities, including that the practitioner
will not express an audit opinion or a review
conclusion on the financial information.
• The form and content of the report to be
issued by the practitioner for the
engagement.
The engagement letter’s form may also vary
for example:
 Arrangement involving experts in the
compilation
 Arrangements to be made with
predecessor practitioner
 The possibility that management or
those charged with governance, as
appropriate, may be requested to
confirm in writing certain information
or explanations conveyed orally to
the
practitioner
during
the
engagement.
 Ownership
of
info
used
in
compilation, giving regards to
requirements of law and regulation.
Recurring engagements
 Evaluate whether there is a need to
revise terms of engagement or to
remind management of its existing
terms (e.g. if there is a change in
mgmt.,
ownership,
nature
of
business, misunderstandings)
Performing the engagement (General
Procedures and PSRS 4410’s Salient
Provisions as to the performance of the
engagement)
Practitioner’s Understanding
 Obtain an understanding needed to
perform the engagement.
 Frame of reference from which
professional judgments is based on.
Compiling the Financial Information
Practitioner is to:
 Compile financial information based
on the records, documents, and
related information provided by
management
 Use significant judgments by
management and discuss these
matters
as
necessary
with
management
(e.g.
accounting
estimates)
Documentation
Include
the
documentation:
ff.
in
engagement
 Significant matters during the
engagement and how they were dealt
with by the practitioner
 Record of how the compiled FI
reconciles with underlying records,
documents,
etc.
provided
by
management
 Final version of compiled FI which
management/TCWG acknowledges
its responsibility over in the
practitioner’s report.
May serve as basis for future engagements.
The Practitioner’s Report
 Indicate
financial
information
compiled and indicate that no
assurance is provided
 Modifications:
o Disclosure
of
material
misstatements, if any.
o Withdrawal
for
scope
limitations.
Includes the ff:
 Report title
 Addressee
 Statement
that
the
financial
information has been compiled
 Responsibilities of MGMT/TCWG in
relation to the financial information
 Identification of the fin. Info and its
related date/period
 Practitioner’s
responsibilities
in
relation to the compiled FIN. INFO.
 Indication of compliance with PSRS
and relevant ETHICAL REQS.
 Explanation of non-assurance (no
verification
of
accuracy
and
completeness AND no opinions)
 Date of report (date of completion of
engagement in accordance with
PSRS)
 Signature and address of practitioner
 For those under special-purpose
financial reporting framework
o Adequate
disclosure
of
special purpose FRFW
o Purpose of fin. Info
o Indication that compiled info
was prepared on the basis of
a special purpose framework.