Compilation or Notice to Reader Statements
Financial reporting at the fiscal year end of a corporation can appear in various forms. The report or reports that you may require will depend on the various stakeholders engaged in your business. These can be creditors, directors, employees, government agencies, owners (shareholders), suppliers, or other community groups. Depending on the stakeholders involved, you may or may not need a detailed set of financial statements. When an accountant is engaged for the preparation of compiled statements, no assurance is given that the financial statements are complete or accurate. However, the statements may provide heightened confidence to certain users of those statements. Check out our Corporate Tax Return Preparation page if a corporate (T2) return is all you need.
You will need to consider the different users of these statements and the value for producing these statements. The objective of a compilation engagement is to take information provided by management of an entity and prepare financial statements that are numerically correct and not false or misleading in the opinion of management. The financial statements prepared may consist of the following:
- Balance Sheet (Statement of Financial Position);
- Income Statement (Statement of Profit and Loss);
- Statement of Retained Earnings; and
- Statement of Cash Flows (if necessary).
Each page on a compiled financial statement has a “Notice to Reader” heading which indicates the level of usefulness for a reader. The user is immediately informed that the statements may not provide them with all relevant information they require.