A compilation refers to financial statements that were prepared or compiled by an organization’s outside accountant. A compilation is often the result of an accounting service known as write-up work. With compilations, or compiled financial statements, the outside accountant converts the data provided by the client into financial statements without providing any assurances or auditing services.
A compilation report should accompany the compiled financial statements and it should state that the financial statements 1) are the representation of the management of the organization, and 2) have not been reviewed or audited and that the accountant offers no opinion or assurances on them.
Compilations allow companies without an accountant to have financial statements prepared at a lower cost than reviewed or audited financial statements.
Learn more about Financial Accounting.
About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.
He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.
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