- If you must have an audit or review, you may not need one every year. It may be enough to alternate between having audits and compilations performed. How often you have an audit as opposed to a compilation would depend upon a few factors described above, such as the state of your accounting system i.e. its reliability, your relationship with the funding source, how much funding you need, and their determination of the overall risk associated with the financing.
A compilation engagement can be combined with other professional services to strengthen your accounting system, making an audit or review less necessary to improve your system’s reliability and “keep your fiscal house in order”:
These services can impair the CPA’s independence when performing the compilation, unless the CPA doesn’t assume management responsibility or doesn’t make management decisions for your organization.
A qualified CPA can also help you prepare for an audit by reconciling accounts timely e.g. bank reconciliations, preparing schedules and work papers that the auditor would prepare, e.g. investment and loan schedules. Doing this would reduce the amount of work your auditor needs to do, and therefore, reduce the cost of the audit. This is a service we can provide, having helped companies prepare for audits for many years. We also assisted auditors with their audit work.
As indicated above, a compilation engagement is separate from a preparation of financial statements engagement which would be performed under SSARS* 21, AR-C section 70. This wasn’t the case prior to SSARS 21; financial statements then were routinely prepared by a CPA as part of the compilation.
Sources used to write this article:
Seven Ways to Reduce your Audit Costs by Dennis Walsh, CPA. Blue Avocado, A Magazine of American Nonprofits.
Is it Time for an Audit? by Jeanne Bell. Blue Avocado, A Magazine of American Nonprofits.
What is a Review or Compilation? National Council of Nonprofits.
SSARS no. 21 – The New Compilation and Review Standards. #7285 CPE course material. Professional Publication Services, LP 2015.
* Statements on Standards for Accounting and Review Services. SSARS 21 is effective for engagements performed in accordance with SSARSs for periods ending on or after December 15, 2015.