Compilation Of Financial Statements
The task of compiling financial statements is to assist the Company in preparing and presenting historical financial information in financial statements (statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flow), without providing assurance as to the reasonableness of the balances.
The objectives of the professional in a compilation order are:
To apply accounting knowledge in the preparation and presentation of financial information in financial statements in accordance with a current accounting framework.
To issue a compliance report.
The practicing accountant in charge of compiling financial statements must comply with ethical requirements and apply good professional judgment.
How to compile financial statements?
The practicing accountant will compile the financial information using the records, documents, explanations and other information provided by the Company’s Management in order to present the transactions by their nature in assets, liabilities, equity, income and expenses.
Finally, the practicing accountant will present the compiled financial statements to the Company’s Management, taking into account his experience of the Company’s business and operations.
If in the course of the compilation task, the practicing accountant becomes aware that the records, documents, among others, are inaccurate, incomplete, he will inform the Company’s Management and request additional or corrected information.
Is the financial statement compilation engagement an audit?
An audit comprises the examination of the main accounts of the statement of situation and results with the purpose of determining if there are material errors, so that the auditor can express an opinion in its opinion on the reasonability of the financial statements based on international financial reporting standards. While a compilation of financial statements is not the objective of the professional in charge of validating the balances presented in the financial information, its objective is to understand the nature of the Company’s economic transactions in order to prepare and present in financial statements for a given period.
When to request a financial statement compilation service?
This compilation service is intended for those entities that, having economic transactions, do not have an accounting professional in their organization and require to present their transactions in financial statements for a better control and understanding of their economic situation and performance, to declare their annual income before the tax administration, to present their financial statements to a banking entity or to bid in tenders with private or state entities.