Compilations are reports that provide a cohesive, organized report of a company’s financial statements. Typically, these are used as the first stage of auditing procedures and are always conducted by a qualified third party—such as a certified public accountant. This information is prepared using statements provided directly by a company. If your business needs to get a compilation and you are curious about how the process works, here’s what you should know about this financial service.

When Are Compilations Necessary?

Compilations can be valuable any time a company needs to gather financial data and present it in an acceptable format—such as those that follow GAAP or IFRS standards.

Banks may require borrowers to submit compilations to confirm that they are adhering to the terms of a business loan. These reports may also be useful for companies that need to release preliminary financial information to investors.

Nonprofits may request this service if they need a qualified professional to prepare data for future tax preparation or audits.

What Are the Advantages?

The greatest advantage of a compilation is that it is prepared by a certified public accountant who has a complete understanding of how to process and present data in an industry-compliant fashion.

The service can also be an affordable way for companies to prepare information without having to hire a full-time accountant. And since there are no review processes required, compilations can be completed in a relatively quick timeframe.

How Accurate Are Compilations?

The potential lack of accuracy is the main drawback of financial statement compilations. Although the accountant will prepare data with precision, they won’t take any steps to verify the information or check that internal control processes are being met. They are simply providing the numbers using the information that the client provided.

What Happens After a Compilation?

In many cases, compilations are followed up with review and audit services that are also provided by a CPA.

During a review, an accountant will check the information in financial statements to look for possible misrepresentations. They will also prepare a report to highlight issues or offer more in-depth explanations.

An audit takes the review process a step further by requiring independent verification. This means that the CPA will monitor the client’s internal controls and confirm other resources to make sure the data is correct. Of all three services, an audit offers the highest level of accuracy.

Whether you’re a lender that needs to check on the fiscal health of a borrower or a business preparing for an audit, Hannegan & Associates can help prepare the data you need. Serving the Edgewood, KY, and Greater Cincinnati area, these experienced certified public accountants will perform financial statement compilations in a timely fashion. Review services are also available for those who may need more assurance in their records. To learn more about these accountants and their other affordable services—such as tax preparation—visit the firm online. If you’d like to schedule a consultation with a skilled professional, call (859) 291-0101.