Over the last several months, practice reviews of compilation engagements across Canada have highlighted some significant deficiencies in the application of the new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements.
Across Canada, a significant number of firms are not compliant in performing CSRS 4200, Compilation Engagements.
What are our significant findings?
- Financial statements were compiled under the previous standard, Section 9200, Compilation Engagements, rather than the new standard effective for compiled information for periods ending on or after December 14, 2021.
- File documentation did not adequately evidence engagement acceptance or continuance procedures.
- Neither the intended use of the compiled information nor the assessment of whether conditions were met to perform a compilation engagement were documented.
- There was inadequate documentation of the understanding of the entity, its systems, and the basis of accounting used.
- The disclosure of the basis of accounting was incomplete or misleading. Notably, some entities disclosed that financial information was compiled using Accounting Standards for Private Entities (ASPE), but they did not comply with all ASPE disclosure requirements (e.g., no cash flow statement, significant missing notes).
What can you do?
- Read CSRS 4200 in its entirety to understand the new requirements.
- Register for relevant training activities. CPA Alberta offers the following relevant courses:
- Compilation Engagements – Overview of CSRS 4200 New Standard
- This course provides an overview of the requirements of the new Canadian Standard for Related Services (CSRS) 4200 and its impact on the planning, implementation and documentation of a compilation engagement.
- Compilation Engagements – Application of CSRS 4200 New Standard
- This course provides a short overview of the CSRS 4200 compilation standard for new and experienced practitioners along with a hands-on opportunity to apply the standard to different scenarios and provides a comparison with the previous standard. This course also provides best practices for compilation engagements and addresses frequently asked questions from practitioners with respect to CSRS 4200.
- Compilation Engagements – Overview of CSRS 4200 New Standard
- Download tools and guidance from CPA Canada, Implementation tool CSRS 4200.
- Update firm tools and methodology, including the engagement letter, compilation programs, and reporting templates.
- Contact CPA Alberta’s Professional Advisory Services team at advisory@cpaalberta.ca.
Prepare for what’s next!
Firms that perform only compilation engagements must implement the new Canadian Standard on Quality Management (CSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements by December 15, 2023, one year later than assurance engagement firms. Find out more information by reviewing this Practitioner Alert from CPA Canada, New quality management standards: Practitioner alert and prepare by downloading CPA Canada’s Implementation tool: New quality management standards.
CPA Alberta’s practice review process protects the public by assessing compliance with professional standards of all CPA firms at least once every three years. In instances of non-compliance, appropriate follow-up or remedial actions are taken.
