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.
South Carolina Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm An engagement letter is a crucial document that outlines the terms and scope of an accounting firm's engagement with a client for reviewing financial statements and performing compilation services. Specifically tailored for South Carolina, this engagement letter ensures compliance with state-specific regulations and requirements. Keywords: South Carolina, engagement letter, review of financial statements, compilation, accounting firm, client, regulations, requirements. Description: The South Carolina Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm is a comprehensive document that establishes a formal agreement between an accounting firm and its client. This engagement letter outlines the terms, responsibilities, and expectations of both parties involved in the review of financial statements and the compilation of financial information. This engagement letter ensures compliance with state-specific regulations and requirements in South Carolina. It is essential to have a legally binding document in place to protect both the accounting firm and its client throughout the engagement process. Different types of South Carolina Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm may include: 1. Review Engagement Letter: Specifies the procedures and extent of the review engagement conducted by the accounting firm. It defines the areas to be reviewed, such as financial statements, internal controls, and compliance with accounting principles. 2. Compilation Engagement Letter: Outlines the process of collecting, classifying, and summarizing financial data provided by the client. It clarifies that the accounting firm will present the compiled information without expressing an opinion or assurance on its accuracy or compliance with accounting standards. 3. Special Purpose Engagement Letter: Tailored for specific engagements, such as agreed-upon procedures, forensic accounting, or due diligence reviews. This engagement letter defines the scope, nature, and objectives of the engagement in detail. Each type of engagement letter is a crucial component in establishing clear communication and understanding between the accounting firm and its client. It ensures that the review of financial statements and compilation services are performed accurately and in compliance with the regulations set forth by the state of South Carolina. In conclusion, the South Carolina Engagement Letter for Review of Financial Statements and Compilation by Accounting Firm is a vital tool to establish a binding agreement between an accounting firm and its client. It outlines the terms, responsibilities, and expectations, ensuring compliance with state-specific regulations. By utilizing different types of engagement letters, the accounting firm can tailor the document to the specific type of engagement required, such as review, compilation, or special-purpose engagements.
