Compilation Engagement
Business Integrity, Insight and Beyond
Agenda
• Recap of Review Engagement and FAQ
• Practical look at the Compilation Engagement
FAQs on Review
• Can I still prepare the financial statements?
• Is that all?
- (I don’t feel comfortable with so little evidence)
•
•
•
•
Which standard do we use?
What is a review going to cost?
Who can do the review?
Group statements if subsidiaries were not
audited?
FAQ on Companies Act
• Calculation of PI Score
• Section 45 Assistance
• Section 90 Auditor appointment
- Same firm?
- Secretarial work?
- If previously appointed?
• Changing the MOI for voluntary audits
• Deadline for preparing AFS
Business Integrity, Insight
and Beyond
Compilation Engagement
• What is a compilation?
• When?
• Who?
Case study
6 Directors
100%
• Internal Bookkeeper up to
Trial Balance
• Service revenue
- R7,8m (2010: R7,3m)
- Automatically invoiced 7 days
before service delivery
MD
Trylon
60%
40%
2011
2010
Employees
10
9
Third party debt
R387 529
R372 752
OHS
Private companies - Assurance
PI
Score
Audit
Audit
Audit
Audit
None
Audit
Review
Audit
None
None
Review
Review
Independently
compiled
Internally
compiled
Independently
compiled
Internally
compiled
350
100
0
Owner managed
Not owner managed
Private companies – Who will do it ?
PI
Score
Registered Auditor (RA)
350
RA
100
Not applicable
0
Independently
compiled
Internally
compiled
Owner managed
RA or CA(SA)
RA
RA or CA(SA) or
CC accounting officer
Independently
compiled
Internally
compiled
Not owner managed
The Review Process
Knowledge of the business
Areas that are likely to be misstated
Enquiry
Focused
enquiry
AP
Focused
AP
Areas that may be
misstated
Additional
enquiries
Additional
procedures
Receivables processing
Should any
invoices be
accrued /
deferred?
Are
invoices
captured?
Processing
•General
ledger
Closing
entries
•Trial
balance
Is mapping
correct?
Importing,
mapping
•Draft
financial
statements
Are related
parties
identified?
Compilation
•Accounting
policies,
notes,
disclosures
•Financial
statements
Are debtors
recoverable?
Audit /
Review
•Annual
financial
statements
Section 29(6)
• (6) Subject to section 214 (2), a person is guilty
of an offence if the person is a party to the
preparation, approval, dissemination or
publication of –
(a) any financial statements, including any annual
financial statements contemplated in section 30,
knowing that those statements –
(i) Fail in material way to comply with the requirements of
subsection (1); or
(ii) Are materially false or misleading, as contemplated in
subsection (2); or
Receivables processing
Should any
invoices be
accrued /
deferred?
Are
invoices
captured?
Processing
•General
ledger
Closing
entries
•Trial
balance
Is mapping
correct?
Importing,
mapping
•Draft
financial
statements
Are related
parties
identified?
Compilation
•Accounting
policies,
notes,
disclosures
•Financial
statements
Are debtors
recoverable?
Audit /
Review
•Annual
financial
statements
Why a compilation template?
When your name is on the front page you take risk
You can’t afford to miss anything
You have to rely on others in the process
Compliant AFS need reliable records
Evidence of work performed (CYA)
You asked for guidance
Give you the best solution
Compilation objectives
• Comply with compilation standard
- ISRS 4410
• Risk management
- Companies Act
• Integration
- Between compiler and auditor / reviewer
• Process
- Cover everything
- It must work the way you work
Receivables processing
Should any
invoices be
accrued /
deferred?
Are
invoices
captured?
Processing
•General
ledger
Closing
entries
•Trial
balance
Is mapping
correct?
Importing,
mapping
•Draft
financial
statements
Are related
parties
identified?
Compilation
•Accounting
policies,
notes,
disclosures
•Financial
statements
Are debtors
recoverable?
Audit /
Review
•Annual
financial
statements
Receivables processing
Mapping
Are
invoices
captured?
Processing
Are debtors
recoverable?
Compilation
Closing
entries
Are related
parties
identified?
Audit /
review
Should any
invoices be
accrued /
deferred?
Is
mapping
correct?
Annual
Financial
Statements
Receivables processing
Are
invoices
captured?
Processing
•General
ledger
Closing
entries
•Trial
balance
Should any
invoices be
accrued /
deferred?
Is
mapping
correct?
Importing,
mapping
•Draft
financial
statements
Probe Compilations
Are related
parties
identified?
Compilation
•Accounting
policies,
notes,
disclosures
•Financial
statements
Are debtors
recoverable?
Audit /
Review
•Annual
financial
statements
Probe MMX
Make it work
Standardise
• Firm template
• Compilation, review and audit working papers
Partner involved
• Pre-planning
• Planning
• Finalisation
Communicate
• Team
• Compiler
• Accountant
• Client staff
• TCWG
Make it work
Know the standards
• ISA / ISRE / ISRS
• IFRS / IFRS for SMEs
• Companies Act
Specialise
Work at the client
Charge everything
Next steps
• Group audits
- ISA 600
• IFRS for SMEs
- Audit & Compilation
• Updates on What’s happening
- Facebook & Twitter
ProBeta Accountancy Development (Pty) Ltd.
info@probeta.co.za
www.probeta.co.za
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#ProBetaAcc
Probe MMX
#Probe User
+27 (11) 886-1395
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