Audited, accountant-reviewed and notice-to-reader (NTR) are three types of financial statements—documents that show the financial status of a company. And a compilation engagement (NTR) report is usually required prior to preparation of a small business corporate tax return. Under a compilation engagement, Financial Statements are aggregated from the accounting information provided by a business. Financial Statements give an idea of where the business is heading and documents its historical accounting data. A compilation engagement however does not provide any level of assurance over the business accounting information, unlike the review and audit engagements.
Financial Statements subject to a compilation engagement need to be fully compliant with GAAP – now known as ASPE (Accounting standard for Private Enterprises). Your accountant might make certain the financial information is clerically accurate and in the correct format, however gives no assurance as to whether any of the professional standards are met. The Canadian Institute of Chartered Accountants is the governing body that provides the guidelines regarding compilation engagements.
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