Preparation, Compilation, or Review: What Is the Accountant Actually Doing?
These services can all involve unaudited financial statements, but the accountant's responsibility and assurance level differ.
Preparation
The accountant prepares financial statements and provides no assurance. A compilation report is not issued merely because statements were prepared.
Compilation
The accountant assists management in presenting financial information in financial statement form. No assurance is provided, and a compilation report is generally issued.
Review
The accountant performs primarily inquiry and analytical procedures and provides limited assurance.
Independence
Independence requirements and disclosure consequences differ by service, so do not treat the three engagements as interchangeable.
The takeaway
Preparation creates statements. Compilation presents them with no assurance. Review adds limited assurance.
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FAQ
Does a compilation provide assurance?
No.
Does a review provide limited assurance?
Yes.
Is preparation the same as compilation?
No.