Compiled financial statements represent the most basic level of service that certified public accountants provide with respect to financial statements. In a compilation, the CPA must comply with certain basic requirements of professional standards, such as having a knowledge of the client's industry and applicable accounting principles, having a clear understanding with the client as to the services to be provided, and reading the financial statements to determine whether there are any obvious departures from generally accepted accounting principles (or, in some cases, another comprehensive basis of accounting used by the entity). It may be necessary for the CPA to perform "other accounting services" (such as creating a general ledger for the client, or assisting the client with adjusting entries for the books of the client (before the financial statements can be prepared). Upon completion, a report on the financial statements is issued that states a compilation was performed in accordance with AICPA professional standards, but no assurance is expressed that the statements are in conformity with generally accepted accounting principles. This is known as the expression of "no assurance." Compiled financial statements are often prepared for privately-held entities that do not need a higher level of assurance expressed by the CPA.
Kansas Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm In Kansas, an engagement letter for the review of financial statements and compilation is a vital document that outlines the terms of the engagement between an accounting firm and its client. It serves as a legally binding agreement that highlights the responsibilities, expectations, and deliverables of both parties involved in the financial statement review and compilation process. Below, we will discuss the key components of a Kansas engagement letter for review of financial statements and compilation, including relevant keywords. 1. Introduction: The engagement letter begins with an introduction, stating the identities of the accounting firm and the client. Keywords: Kansas, engagement letter, review of financial statements, compilation, accounting firm. 2. Objective of Engagement: This section defines the scope and objective of the engagement. It specifies whether it is a review of financial statements or a compilation engagement. Keywords: objective, scope, review of financial statements, compilation. 3. Responsibilities of the Accounting Firm: This section outlines the specific duties the accounting firm will undertake during the engagement, such as conducting necessary procedures, examining financial statements, and complying with applicable professional standards. Keywords: responsibilities, duties, procedures, examination, professional standards. 4. Responsibilities of the Client: The engagement letter also highlights the responsibilities of the client in providing accurate and complete financial records, disclosures, and other necessary information for the review or compilation process. Keywords: responsibilities, financial records, disclosures, information. 5. Limitations: This section discusses the limitations and constraints associated with the engagement, such as the use of estimates, inherent risk, and the inability to detect fraud or errors in financial statements. Keywords: limitations, constraints, estimates, inherent risk, fraud, errors, financial statements. 6. Deliverables: The engagement letter specifies the expected deliverables, such as the review report, compiled financial statements, accompanying footnotes, and the accountant's letter of compilation. Keywords: deliverables, review report, compiled financial statements, footnotes, accountant's letter. 7. Fees and Payment Terms: The engagement letter includes details regarding the fees charged by the accounting firm for its services and the payment terms agreed upon by both parties. Keywords: fees, payment terms, accounting firm, services. Types of Kansas Engagement Letters for Review of Financial Statements and Compilation: 1. Engagement Letter for Review of Financial Statements: This type of engagement letter is specific to engagements where the accounting firm performs a review of a company's financial statements, providing limited assurance on their accuracy and compliance with relevant accounting principles. 2. Engagement Letter for Compilation of Financial Statements: This type of engagement letter is used when the accounting firm compiles a company's financial statements without providing any assurance or independent examination but ensures that these statements are presented in accordance with generally accepted accounting principles. In conclusion, an engagement letter for the review of financial statements and compilation is a critical document in Kansas that establishes the terms and expectations between an accounting firm and its client. By clearly defining the responsibilities, limitations, and deliverables, this letter ensures transparency, professionalism, and clarity throughout the engagement process.Kansas Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm In Kansas, an engagement letter for the review of financial statements and compilation is a vital document that outlines the terms of the engagement between an accounting firm and its client. It serves as a legally binding agreement that highlights the responsibilities, expectations, and deliverables of both parties involved in the financial statement review and compilation process. Below, we will discuss the key components of a Kansas engagement letter for review of financial statements and compilation, including relevant keywords. 1. Introduction: The engagement letter begins with an introduction, stating the identities of the accounting firm and the client. Keywords: Kansas, engagement letter, review of financial statements, compilation, accounting firm. 2. Objective of Engagement: This section defines the scope and objective of the engagement. It specifies whether it is a review of financial statements or a compilation engagement. Keywords: objective, scope, review of financial statements, compilation. 3. Responsibilities of the Accounting Firm: This section outlines the specific duties the accounting firm will undertake during the engagement, such as conducting necessary procedures, examining financial statements, and complying with applicable professional standards. Keywords: responsibilities, duties, procedures, examination, professional standards. 4. Responsibilities of the Client: The engagement letter also highlights the responsibilities of the client in providing accurate and complete financial records, disclosures, and other necessary information for the review or compilation process. Keywords: responsibilities, financial records, disclosures, information. 5. Limitations: This section discusses the limitations and constraints associated with the engagement, such as the use of estimates, inherent risk, and the inability to detect fraud or errors in financial statements. Keywords: limitations, constraints, estimates, inherent risk, fraud, errors, financial statements. 6. Deliverables: The engagement letter specifies the expected deliverables, such as the review report, compiled financial statements, accompanying footnotes, and the accountant's letter of compilation. Keywords: deliverables, review report, compiled financial statements, footnotes, accountant's letter. 7. Fees and Payment Terms: The engagement letter includes details regarding the fees charged by the accounting firm for its services and the payment terms agreed upon by both parties. Keywords: fees, payment terms, accounting firm, services. Types of Kansas Engagement Letters for Review of Financial Statements and Compilation: 1. Engagement Letter for Review of Financial Statements: This type of engagement letter is specific to engagements where the accounting firm performs a review of a company's financial statements, providing limited assurance on their accuracy and compliance with relevant accounting principles. 2. Engagement Letter for Compilation of Financial Statements: This type of engagement letter is used when the accounting firm compiles a company's financial statements without providing any assurance or independent examination but ensures that these statements are presented in accordance with generally accepted accounting principles. In conclusion, an engagement letter for the review of financial statements and compilation is a critical document in Kansas that establishes the terms and expectations between an accounting firm and its client. By clearly defining the responsibilities, limitations, and deliverables, this letter ensures transparency, professionalism, and clarity throughout the engagement process.
