Implementation Tool for Practitioners

CANADIAN STANDARD ON RELATED SERVICES (CSRS)

JUNE 2020

CSRS 4200, Compilation Engagements

The Auditing and Assurance Standards Board (AASB) has issued a new Canadian Standard
on Related Services (CSRS) 4200, Compilation Engagements. CSRS 4200 replaces:

• Section 9200, Compilation Engagements

• Assurance and Related Services Guideline AuG-5, Compilation Engagements - Financial

Statement Disclosures

This Implementation Tool for Practitioners (Tool) will assist you with the implementation of CSRS 4200.
It provides guidance to you, the practitioner, when you are asked to perform a compilation engagement.
You will need to adapt the Tool to the specific circumstances of each engagement. This Tool does not
replace the need to read CSRS 4200, including the application and other explanatory material.

This Tool is the fourth document in a series issued by CPA Canada related to CSRS 4200. The
following are the previously-released documents:

• Practitioner Alert was developed to help prepare you and your firm for the transition to
CSRS 4200.

• Management Briefing was developed to inform management about the impact of CSRS 4200
and to assist management in discussions with you.

• Third-Party Briefing was developed to help lenders and other third parties enhance their
understanding of a compilation engagement and to facilitate discussions.
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The primary objective of this Tool is to supplement the Alert and Briefings and to assist you
with the implementation of CSRS 4200 for a specific compilation engagement.

Effective Date
CSRS 4200 is effective for compiled financial information for periods ending on or after
December 14, 2021. You are permitted to use the new standard before the effective date.

Contents
Scope of CSRS 4200 3

Understanding CSRS 4200 8

How Using This Implementation Tool Can Help 11

Acceptance and Continuance 11

Obtain Knowledge Related to the Entity 16

Compile the Financial Information 19

Issue the Compilation Engagement Report 22

Possible Withdrawal From Engagement 23

Subsequent Discovery of Facts 24

Documentation 26

What can you do to prepare? 30

Additional Resources 30

Appendix A – Significant Differences Between CSRS 4200 and Section 9200 31

Appendix B – Sample Compilation Engagement Report 35

Appendix C – Examples of Descriptions of the Basis of Accounting 36

Appendix D – Communication With Management and Others 39

About This Publication 43

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This Tool includes questions and responses to expand on some of the issues and to anticipate some
of the questions that may arise on the implementation of CSRS 4200. The first of these questions is
related to the term “financial information.”

QUESTION 1
Why does CSRS 4200 refer to financial information and not financial statements?
CSRS 4200 refers to financial information and not financial statements to reflect that
information subject to compilation engagements is often comprised of part of a completed
set of financial information or schedules of financial information.
The term “financial statements” ordinarily refers to a complete set of financial statements,
including a statement of cash flows and note disclosures, as determined by the requirements
of the applicable financial reporting framework. The preparation of such financial statements
in a compilation engagement is rare.
Information subject to a compilation engagement may include:
• a complete set of financial statements, but that is expected to be rare
• a part of a complete set of financial statements
• schedules of financial information
• pro forma financial information (i.e., historical information modified to reflect one
or more “what if” events)
(See CSRS 4200 Para. A1)

Scope of CSRS 4200

(See CSRS 4200 Para. 1 – 3 and A1 – A5)

CSRS 4200 provides information on which services constitute compilation engagements. Some
services are excluded from the standard that may be considered “new” when compared to Section 9200.
This means that some services you performed under Section 9200 will not necessarily be compilation
engagements under CSRS 4200.

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The following table summarizes the scope exclusions in CSRS 4200. These are circumstances that do
not require you to undertake a compilation engagement, and therefore CSRS 4200 does not apply:

Scope Exclusions*

When you prepare financial information and are:

• acting in the capacity of trustee in bankruptcy, receiver, or liquidator
• contracted to act as a member of the entity’s finance department with controllership responsibilities
(CFO role) (New)
• engaged to perform a bookkeeping service that may result in a general ledger, trial balance or
system-generated financial information (New)

When the financial information:

• is to be presented solely in government-prescribed tax forms such as corporate, trust or personal
income tax returns (New)
• will be subject to an audit or a review engagement performed by another practitioner (New)
• is prepared as part of another service such as (New):
— assistance in the preparation of forms prescribed by governmental and regulatory bodies
or by others such as insurers
— business valuation service
— litigation support service
— personal financial planning service

* CSRS 4200 indicates which services are excluded from the scope; however, you may decide or be
requested to issue a communication on the financial information. In that case, the only appropriate
form of communication is a compilation engagement report (see Sample Compilation Engagement
Report included in Appendix B of this Tool) to which all requirements of CSRS 4200 apply.

Applying CSRS 4200 gives you an opportunity to revisit the services you currently provide
to your client and determine which service best meets their needs.

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QUESTION 2
How do I know if CSRS 4200 is the appropriate standard / engagement to meet
the clients’ request / needs?
The first step is to identify the client’s needs.
You can start the discussion with such preliminary questions as the following:
• Do they need bookkeeping services?
• Do they need tax compliance services?
• Do they want you to assist them with preparing financial information?
• Do they want a practitioner’s communication?
• Do they have any third parties that intend to use the financial information?
• Do they need assurance on the financial information?
Remember, if management or a third party wants or needs assurance on the financial
information, then a compilation engagement under CSRS 4200 is not the appropriate
engagement. In such case, you may ask your client to consider whether a review engagement
or an audit engagement would better address the needs of their users.
If no assurance is required, you can determine whether CSRS 4200 is the appropriate
engagement.
The following two scenarios illustrate some possible conclusions on the nature of the services
that your client may request:
• If your client requires a bookkeeping service and a tax service and does not request
financial information with your communication attached, then CSRS 4200 need not apply.
• If you are engaged to do the above but your client requests financial information with
your communication attached, because the client wants to provide it to a third party
or for management’s own purposes, then CSRS 4200 will apply.

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QUESTION 3
Can I attach a compilation engagement report (or any other form of
communication) on financial information that is excluded from the scope of
CSRS 4200?
There may be circumstances when CSRS 4200 does not apply but management requests a
practitioner’s communication, or when you decide that a communication is necessary to avoid
users’ misunderstanding the nature and limitations of the engagement.
The only form of communication you can attach to the financial information is a compilation
engagement report. In such case, all the requirements of CSRS 4200 apply.
No other form of communication, such as disclaimers, can be included or attached to financial
information excluded from the scope of CSRS 4200. The reason that the only appropriate form
of communication is a compilation engagement report is because such a report appropriately
communicates management and the practitioner’s responsibilities and the limitations of the
engagement. Different forms of communication, such as disclaimers, may be confusing and
misleading to readers, so the standard promotes consistency in reporting on information.
(See CSRS 4200 Paras. 1 – 3 and A1 – A5)

QUESTION 4
I understand that CSRS 4200 does not apply to a bookkeeping service. Does
CSRS 4200 apply if management later asks for compiled financial information
or for a practitioner’s communication in addition to the bookkeeping service?
As discussed, CSRS 4200 does not apply to financial information prepared by a practitioner
engaged to perform a bookkeeping service. However, it is possible that management requests
multiple services which include services that are not scoped out of CSRS 4200, or management
may request a communication be attached, and therefore CSRS 4200 would apply.
The scope exclusion is applicable to a bookkeeping service and the description of a
bookkeeping service in the application material states:
“A bookkeeping service involves collecting, classifying, summarizing and processing data
to create underlying accounting records, which may result in a general ledger, trial balance
or system-generated financial information to which no practitioner’s communication is
included or attached.” (See CSRS 4200 Para. A3)

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The above description recognizes that a practitioner may provide an entity with
system-generated financial information in a bookkeeping service, but no practitioner’s
communication can be included or attached to such financial information. Today’s
technology allows bookkeeping and other software to collect, classify, summarize and
process the data to create system-generated financial information. To determine if you
are providing a bookkeeping service or a compilation engagement, you will need to have
a discussion with your client to understand their needs for financial information and a
practitioner’s communication.
The Basis for Conclusions Para. 4 of CSRS 4200 includes the following:
The AASB acknowledged that system-generated financial information may look like
compiled financial information. Today’s technology allows a practitioner or an entity’s
management to easily generate financial information. However, a compilation engagement
and a bookkeeping service are different in their activities and communication. The service
an entity requests, including whether a communication is required to be attached to the
financial information, determines whether the practitioner has been engaged to perform
a compilation engagement or a bookkeeping service.
REMINDER: CSRS 4200 provides the option to issue a communication on financial information
prepared in a bookkeeping service. In such circumstances, the only appropriate
form of communication is a compilation engagement report and all the
requirements of CSRS 4200 apply.
(See CSRS 4200 Paras. 2(c) and A3)

QUESTION 5
Does CSRS 4200 apply if I prepare financial information to be used in government-
prescribed tax forms AND the financial information is also to be provided to
management for other purposes which are not excluded from CSRS 4200?
Yes, CSRS 4200 does apply. Although CSRS 4200 does not apply to financial information
prepared for inclusion in government-prescribed tax forms, if the financial information has
another use that is not covered by the scope exclusion, then CSRS does apply (i.e., preparation
of financial information for submission to management with a communication attached).
For the scope exclusion to apply, the financial information you prepare cannot have another
use outside the circumstances covered by the scope exclusion in Para. 2 of CSRS 4200.
However, if the practitioner provides multiple services and they are all excluded from the
scope of CSRS 4200 (e.g., bookkeeping service and a tax service), then CSRS 4200 would
not apply.
(See CSRS 4200 Paras. 2(d)(i) and A2)

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Understanding CSRS 4200

The first step in understanding how to apply CSRS 4200 is to read the full standard, including
the application and other explanatory material.

QUESTION 6
Are there any specific terms that are important to my understanding the
requirements of CSRS 4200?
Yes, the following terms are important to your understanding of CSRS 4200:
• Practitioner: a professional accountant in public practice. The term includes the
engagement partner or other members of the engagement team or, as applicable, the firm.
• Third party: the individual, organization or group other than management or those charged
with governance (TCWG).
• Basis of accounting: Financial information may be prepared and presented in accordance
with different bases of accounting. A basis of accounting may be:
— established by an authorized or recognized standards-setting organization (e.g.,
Accounting Standards for Private Enterprises [ASPE]),
— prescribed by law, regulation, or contract, or
— developed by management (e.g., a modified cash basis). A basis of accounting
developed by management is not ASPE (or Accounting Standards for Not-for-Profit
Organizations [ASNFPO] in the CPA Canada Handbook – Accounting). It would be rare
that a basis of accounting applied in the preparation of compiled financial information
under CSRS 4200 would be compliant with all aspects of ASPE or ASNFPO.
As mentioned, a basis of accounting may take the form of an established framework (such
as ASPE), that includes various accounting policy choices, such as accounting for income
taxes or accounting for investments. Therefore, if the basis of accounting is ASPE, the
significant accounting policy choices are described in a note to the financial information.
A basis of accounting developed by management may present limited, if any, accounting
policy choices. This is because the accounting policies are generally included in the
basis of accounting (i.e., there are no “choices” to make). However, certain accounting
policies are nonetheless used, for example in recognizing and measuring inventory in the
compiled financial information. These accounting policies, typically described in the basis
of accounting note in the compiled financial information, help users understand how the
compiled financial information is prepared. Therefore, the separate disclosure of accounting
policies used is not necessary if the basis of accounting is developed by management.
• Management: When CSRS 4200 makes references to “management,” it means
“management and, where appropriate, those charged with governance.” (See CSRS 4200
Paras. 16 and A6)
The Glossary of Terms in the CPA Canada Handbook – Assurance includes the terms defined
in CSRS 4200 and can be used to assist in its consistent application and interpretation.
(See CSRS 4200 Paras. 14 and A6)

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The components of a compilation engagement can be summarized in Figure 1:

FIGURE 1

Ethical Requirements

Acceptance or Continuance

Communications, Including Discussions

• Obtain management’s acknowledgment of the basis of accounting
that is expected to be applied.
• Inquire concerning intended use of the compiled financial information.
Professional Judgment

with Management**
• Prepare new engagement letter.

Perform the Engagement

• Obtain an understanding of the entity and its environment.
• Compile the financial information.
• Discuss with management significant judgments for which assistance
had been provided.
• Read the compiled financial information.
• Bring matters to the attention of management, if necessary.
• Obtain management’s acknowledgment of responsibility for the final
version of the compiled financial information.

Compilation Engagement Report

Documentation
** And TCWG, if applicable.

Ethical requirements
As shown in Figure 1, ethical requirements are relevant throughout the compilation engagement.
Ethical requirements are specified in detail in the provincial Code of Professional Conduct / Code
of Ethics.

The provincial Code of Professional Conduct / Code of Ethics does not require you to be independent;
however, when there is a threat to independence such that you may be seen by a reasonable observer
as lacking independence, the Code requires disclosure in the compilation engagement report.

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QUESTION 7
Has there been any change in the provincial Code of Professional Conduct /
Code of Ethics regarding the disclosure related to independence?
No, there has been no change in the provincial Code of Professional Conduct / Code of Ethics
related to compilation engagements.
CSRS 4200 requires you to comply with all relevant ethical requirements when performing
a compilation engagement. These requirements are set out in the provincial Code of
Professional Conduct / Code of Ethics issued by the various professional accounting bodies.
The provincial Code of Professional Conduct / Code of Ethics does not require you to be
independent; however, when there is a threat to independence such that you may be seen
by a reasonable observer as lacking independence, the Code requires disclosure in the
compilation engagement report. For example, the following addition to the bottom of
the compilation engagement report may be suitable:
A partner in this accounting firm owns xx% of the Class A shares of Client Limited
Even though there is no requirement for you to be independent, you will need to perform
and document an assessment of independence since any impairment of independence
requires disclosure.
Refer to your respective provincial accounting body for information on the Code of
Professional Conduct / Code of Ethics.
(See CSRS 4200 Paras. 20 and A7 - A8)

Professional judgment
As shown in Figure 1, professional judgment is applied in performing a compilation engagement and is
based on the facts and circumstances that are known to you up to the date of the report. Professional
judgment involves the application of relevant training, knowledge and experience, and relevant ethical
requirements.

Areas where professional judgment may be needed include:

• determining whether you can accept or continue the engagement

• determining the extent of knowledge of the entity required to perform the compilation
engagement

• assisting management in making decisions about the basis of accounting to be applied in

preparing the compiled financial information, including, where applicable, the appropriate
accounting policies to be used

• assisting management in developing accounting estimates

• determining which matters to bring to the attention of management

• reading the compiled financial information and considering whether such information
does not appear to be misleading

• determining the extent of documentation that you must complete

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Communication with management and others

(See various requirements in CSRS 4200)

As shown in Figure 1, communication with management and others may take place throughout the
compilation engagement. This communication can take place in the pre-acceptance (or continuance),
performing and reporting phases of the engagement.

This communication includes formal communications, such as the engagement letter and the
compilation engagement report. However, it also involves other communications, such as inquiry and
acknowledgments. These communications may take place between management, others within the
entity, and TCWG (as appropriate). See Appendix D of this Tool for a summary of the other required
communications.

Documentation
As shown in Figure 1, documentation appears as a label on the “outside” of the figure to illustrate
its relevance throughout the compilation engagement. You are required to document how
the requirements of CSRS 4200 were met. The documentation must be sufficient to enable an
experienced practitioner having no previous connection with the engagement to understand how
the requirements were met. The nature and extent of documentation to be included in the working
paper files involves professional judgment. The documentation requirements of CSRS 4200 and
some examples are discussed in more detail later in this Tool.

How Using This Implementation Tool Can Help

This Tool includes a one-page diagram (Figure 1) summarizing the components of a compilation
engagement. It is easily detachable and useful as a reminder. As mentioned, this Tool also
includes various questions and answers that will help you implement CSRS 4200.

This part of the Tool will discuss in more detail the following components of a compilation
engagement introduced in Figure 1:

• Acceptance and continuance.

• Obtain knowledge related to the entity.

• Prepare the compiled financial information.

• Issue the compilation engagement report.

Acceptance and Continuance

(See CSRS 4200 Para. 22 – 26 and A11 – A23)

Compilation engagements performed in accordance with CSRS 4200 can be divided into two types:

1. those where the compiled financial information is for management’s purpose

2. those where the financial information is intended to be used by a third party

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When a third party will be using the compiled financial information, CSRS 4200 includes the
additional acceptance (or continuance) conditions discussed below.

Prior to accepting or continuing any compilation engagement, you must:

• Make inquiries of management regarding the intended use of the compiled financial information,
including whether the compiled financial information is intended to be used by a third party; and

• Obtain an acknowledgment from management of the expected basis of accounting to be

applied in the preparation of the compiled financial information.

However, when the compiled financial information is intended to be used by a third party, CSRS 4200
includes additional acceptance (or continuance) conditions. You may accept (or continue) the
engagement if, according to management, the third party:

• is in a position to request and obtain further information from the entity

or

• has agreed with management on the basis of accounting to be applied in the preparation
of the compiled financial information

A common third party would be a lender who is likely to be in a position to obtain further
information through the lending agreement.

If neither of these conditions is met, you cannot accept or continue a compilation engagement
unless the basis of accounting to be applied in preparing the compiled financial information is a
general-purpose framework, e.g., ASPE. It is a rare occurrence that the basis of accounting applied
to compiled financial information would be a general-purpose framework. In such case, you may ask
your client to consider whether a review engagement or an audit engagement would better address
the needs of their users.

REMINDER: As indicated above, when the compiled financial information is intended to be used by a third
party, certain conditions must be met. You must obtain management’s acknowledgment that
the third party is in a position to request and obtain further information from the entity or
that the third party has agreed with management on the basis of accounting to be applied.
This acknowledgment by management must be included in the engagement letter or other
suitable form of written agreement. You are not required to verify whether the third party is in
a position to request and obtain further information from the entity or has agreed to the basis
of accounting; management’s acknowledgment will suffice.

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Figure 2 can be used in the engagement acceptance (or continuance) decision:

FIGURE 2

Is the compiled financial information to be used by a third party?

Yes
No

Is the third party in a position to request and

obtain further information from the entity?

No
Yes

Has the third party agreed with management

the basis of accounting to be applied?

No
Yes

Do not accept a compilation engagement You can accept a compilation

unless the basis of accounting to be engagement under CSRS 4200.
applied is a general-purpose framework,
Agree on the terms of engagement
such as ASPE. Using ASPE as the basis of
before performing the engagement.
accounting would be rare, and in these
rare circumstances you may ask
management to consider whether an
audit engagement or a review engagement
would better address the needs of users
(See CSRS 4200 Para. A19)

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QUESTION 8
What steps must I complete to meet the requirements related to the acceptance
(or continuance) decision?

The level of work effort related to the engagement acceptance (or continuance) decision is
a matter of professional judgment and can be summarized into three areas:
1. Inquiries of management about the intended use of compiled financial information,
including whether the information is intended to be used by a third party.
You must make inquiries of management about the intended use of the compiled financial
information. [See CSRS 4200 Para. 22(a)].
In some circumstances, knowledge of the broad user group (e.g., current or potential
lenders for borrowing purposes) rather than the specific user (e.g., ABC bank) may be
sufficient information when considering the conditions for accepting or continuing the
engagement. In other circumstances, the practitioner may need further information
about the third party to consider those conditions. (See CSRS 4200 Para. A11)
2. Obtain management’s acknowledgment of the basis of accounting.
This acknowledgment from management of the basis of accounting expected to be applied
in the preparation of the compiled financial information may take different forms: a written
communication (e.g., in paper form, or by electronic or other medium) or an oral discussion
which you would document.
It is possible that the basis of accounting expected to be applied in the preparation
of the compiled financial information may change while you are performing the
engagement. Therefore, you will also obtain management’s acknowledgment that it has
taken responsibility for the final version of the compiled financial information once the
engagement is completed (See further related discussion later in this Tool).
3. Determine whether the engagement acceptance (or continuance) conditions are met, and
that you can therefore accept the compilation engagement.
When the compiled financial information is intended to be used by a third party, certain
conditions must be met for you to accept a compilation engagement. You must obtain
management’s acknowledgment that the third party is in a position to request and obtain
further information from the entity or that the third party has agreed with management
on the basis of accounting to be applied. This acknowledgment must be included in the
engagement letter or other suitable form of written agreement. You are not required to
verify whether the third party is in a position to request and obtain further information
from the entity or has agreed to the basis of accounting. Management’s acknowledgement
will suffice.
Examples of a third party include, but are not limited to a:
• banker
• supplier or customer
• purchaser of the business
• party to a dispute or litigation, such as matrimonial cases
• funder for a not-for profit organization

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The third party may be in a position to request and obtain further information from the
entity through:
• law or regulation
• contract
• negotiation
• other arrangements
(See CSRS 4200 Paras. 22 – 26 and A11 – A23)

Agree to the terms of the engagement

PREPARE AN ENGAGEMENT LETTER FOR EACH ENGAGEMENT!

A written agreement such as an engagement letter documents the terms of the engagement and
helps avoid misunderstanding on the respective responsibilities of you and management, the scope
of the engagement, and the form and content of the report to be issued.

A sample engagement letter is included in Appendix 1 of CSRS 4200.

It is important that the engagement letter be tailored to the particular engagement. It is recommended
that you review the engagement letter with management so that they have a clear understanding of the
engagement and of their responsibilities. Of course, management must sign and date the engagement
letter to acknowledge their understanding, and you may document any related discussion.

QUESTION 9
Do I have to prepare an engagement letter every year for a recurring engagement?
No, it is not a requirement to prepare an engagement letter each year.
If it is not your normal practice to prepare an engagement letter for a recurring engagement
each year, consider whether any of the following should be factored in as you evaluate whether
to either revise the terms of engagement or remind management of the existing terms of
engagement:
• an indication that management misunderstands the objective and scope of the
engagement
• any revised or special terms of the engagement
• a recent change of senior management (or TCWG) of the entity
• a significant change in the ownership of the entity
• a significant change in nature or size of the entity’s business
• a change in legal, regulatory, or contractual provisions affecting the entity
• an expected change in the use of the compiled financial information
(See CSRS 4200 Paras. 24 – 25, A23 and Appendix 1 to CSRS 4200)

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Obtain Knowledge Related to the Entity

(See CSRS 4200 Paras. 27 and A24 – A26)

The knowledge related to the entity and the compilation engagement would include the following:

• the entity’s business and operations

• the entity’s accounting system and accounting records

• the basis of accounting to be applied and, where applicable, the accounting policies used in the
preparation of the compiled financial information.

Often, the best way to obtain this knowledge is to ask the appropriate questions as part of your ongoing
process throughout the engagement. You will use this knowledge in exercising your professional
judgment in the various phases of the compilation engagement. Note that the breadth and depth
of knowledge obtained in a compilation engagement is lower than in a review or audit engagement.

QUESTION 10
How much knowledge must I obtain about the entity to perform a compilation
engagement, and how do I obtain this knowledge?
The amount of knowledge needed will vary by engagement, so there is no single correct
answer. An area of professional judgment, the amount of knowledge you obtain needs to
be sufficient for you to be able to assist management in preparing the compiled financial
information according to the basis of accounting they have selected.
In obtaining knowledge of the entity’s business and operations, you may consider:
• the nature of the entity’s assets, liabilities, revenues and expenses
• the size and complexity of the entity and its operations
In obtaining knowledge of the entity’s accounting system and accounting records, you may
consider:
• how transactions are recorded, classified and summarized in the entity’s financial
information to determine:
— the nature and extent of accounting adjustments that might need to be made for
the compiled financial information to be prepared in accordance with the basis of
accounting selected by management; and
— whether the information provided is not otherwise misleading
• the types of matters that required accounting adjustments to the entity’s financial
information in prior periods
The knowledge can be obtained from:
• prior engagements
• discussion with management or others within the entity
• other client engagements
• experience gained with the entity’s industry
(See CSRS 4200 Paras. 27, A9 and A24 – A26)

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Basis of accounting
CSRS 4200 requires that the compiled financial information include a note describing the basis
of accounting applied in the preparation of the compiled financial information.

The purpose of the description of the basis of accounting is to assist users in understanding
how the compiled financial information was prepared.

Examples of bases of accounting commonly encountered in compilation engagements include:

• a cash basis of accounting

• a cash basis of accounting with selected accruals and accounting estimates

• a basis of accounting prescribed by a contract or other form of agreement established

by a creditor or a regulator

As management may not have the necessary knowledge, you may help them select the basis
of accounting. However, management is responsible for the compiled financial information and
selection of the basis of accounting. Consequently, you are required to ask management to:

• Acknowledge the basis of accounting to be applied prior to accepting or continuing the

engagement.

• Take responsibility for selecting that basis of accounting in the terms of engagement.

• Acknowledge responsibility for the final version of the compiled financial information.

The following is one possible example of the note:

Example – Real Estate Rental Company:

The basis of accounting applied in the preparation of the balance sheet of ABC Company as at
December 31, 20X1 and the income statement for the year then ended, is on the historical cost
basis and reflects cash transactions with the addition of:

• rent receivable based on lease terms, less an allowance for doubtful accounts

• revenue producing property amortized in accordance with amounts allowable for income
tax purposes

• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

• rental revenue recorded in accordance with the lease terms

See Appendix C of this Tool for further examples.

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QUESTION 11
Does the basis of accounting used in the compilation engagement have to be a
general-purpose framework, such as ASPE or ASNFPO?
No, in fact, it would be rare for compiled financial information to be prepared in accordance
with ASPE or ASNFPO. However, in the rare circumstance that management asks you to
prepare compiled financial information in accordance with a general-purpose framework, you
may ask management to consider whether an audit engagement or a review engagement would
better address the needs of users.
If there are multiple third parties requiring different bases of accounting, this is a situation
where a general-purpose framework could be useful. For example, in the year of selling the
business where there is a banker and a potential purchaser, a general-purpose framework
could meet the needs of both parties. However, in such a circumstance you may ask
management to consider whether an audit engagement or a review engagement would
better address the needs of these users.

QUESTION 12
Is it possible that I could develop a standard description for the “basis of
accounting” for all my compilation engagements?
It is possible that many of your clients will have a similar basis of accounting.
However, it is likely that there will be differences. The industry, nature of assets, liabilities,
revenues and expenses will differ, as will the type of compiled financial information (i.e., complete
set of financial statements, a balance sheet and income statement, a schedule) and its use.
The purpose of describing the basis of accounting in the note to the compiled financial
information is to help users understand how the compiled financial information is prepared.
See Appendix C of this Tool for examples of the description of the basis of accounting in
specific circumstances.

QUESTION 13
Can the basis of accounting be described as “ASPE with an exception …”?
It is possible; however, the compiled financial information must be prepared in accordance
with all recognition, measurement, presentation and disclosure requirements of ASPE with
an exception that can be clearly described with no potential for misunderstandings that may
make the compiled financial information misleading. Caution is necessary as a description of
the basis of accounting which refers to ASPE may imply full compliance with ASPE.
A description of the basis of accounting that contains imprecise qualifying and limiting
language (e.g., “the financial information is in substantial compliance with Canadian
Accounting Standards for Private Enterprises”) is not an adequate description, as it may
mislead users of the compiled financial information.

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IMPLEMENTATION TOOL FOR PRACTITIONERS 19

Referring to ASPE in the basis of accounting note would be very rare in a compilation
engagement where the majority of compiled financial information is prepared in accordance
with a basis of accounting that is substantially different from ASPE, as the compiled financial
information would normally exclude a cash flow statement and notes.
REMINDER: Full compliance with ASPE would mean all recognition, measurement,
presentation and disclosure requirements are met, such as inclusion of
a cash flow statement and full note disclosure.
(See CSRS 4200 Paras A29 – A30)

Compile the Financial Information

The following figure includes a summary of the process of performing a compilation engagement
in accordance with CSRS 4200, and the arrow is placed to indicate where this step of compiling
the financial information fits in.

FIGURE 3

Obtain knowledge related to the entity

Compile the financial information, including a note that describes the basis of accounting

Yes
Has the practitioner assisted management Discuss with management
No with significant judgment? those significant judgments

Read the compiled financial information in light of the knowledge obtained and “standback”

Has the practitioner become aware of matters that may cause the
compiled financial information to be misleading?
No
Yes

Ask management for additional or corrected information

Yes No Withdraw from the engagement

Has management provided additional
and inform management
or corrected information?
of the reasons

Obtain acknowledgement of management’s responsibility for the compiled financial information

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IMPLEMENTATION TOOL FOR PRACTITIONERS 20

QUESTION 14
Is comparative financial information related to the previous period required
in a compilation engagement?
CSRS 4200 does not require or prohibit the inclusion of comparative information in the
compiled financial information.
Therefore, the inclusion of comparative information is a matter of professional judgment.

QUESTION 15
Are notes to the financial statements required in a compilation engagement?
CSRS 4200 requires that you include a description of the basis of accounting but does
not require or prohibit the inclusion of other notes. Additional notes may be included if
considered useful or necessary to prevent the information from being misleading. (See
Appendix C of this Tool for further discussion on the basis of accounting, and for examples
of the description of the basis of accounting in specific circumstances.)
Therefore, the inclusion of notes to the financial information is a matter of professional
judgment.
Note: In the rare occasion that a general-purpose framework such as ASPE is used, all
required notes must be included.

QUESTION 16
If comparative information is included in the compiled financial information and
there is a change in the basis of accounting, do I have to retrospectively change
the comparatives?
Not necessarily, as CSRS 4200 does not address your responsibility when comparative
information is included in the compiled financial information and there is a change in the
basis of accounting from the previous year. The following options are possible:
1. retrospective restatement of the comparative information along with a description in the
compiled financial information of the change in the basis of accounting
2. no retrospective restatement of the comparative information, only the inclusion of a
description in the compiled financial information of the change in the basis of accounting
3. no retrospective restatement of the comparative information or inclusion of a description,
assuming the change in the basis of accounting does not make the compiled financial
information appear misleading
In some circumstances, the restatement and description may be considered necessary
to prevent the compiled financial information from being misleading.

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Reading the compiled financial information (sometimes referred to as “stand-back

consideration”)
After preparing the compiled financial information, you must read the compiled financial information
in light of your knowledge of the entity and the basis of accounting applied in preparing the
compiled financial information, and consider if it does not appear misleading. CSRS 4200 uses
the term “misleading” (rather than “false or misleading”) as the descriptor of the principle-based
threshold that you apply when performing a compilation engagement.

QUESTION 17
Why does CSRS 4200 use the term “misleading” and not the phrase “false and
misleading” to describe the threshold that I apply when performing a compilation
engagement?
CSRS 4200 uses the term “misleading” in paragraph 30, which requires you to read the
compiled financial information in light of your knowledge of the entity and the basis of
accounting applied in the preparation of the compiled financial information, and consider
whether such compiled financial information does not appear misleading. This Tool has
referred to this requirement as a “stand-back consideration.”
CSRS 4200 uses the term “misleading” and not “false or misleading” to describe the threshold
of potential “wrongness” in compiled financial information. It does not use the phrase “false or
misleading” because the term “false” may inappropriately suggest that you have an obligation
to read the compiled financial information to identify errors or incomplete information, even if
insignificant. Nonetheless, a practitioner’s ethical responsibility to not be knowingly associated
with information that is false or misleading applies to all aspects of their work, regardless of
the service being provided.
If you become aware of matters that cause the compiled information to appear misleading,
CSRS 4200 requires that you bring these matters to the attention of management and
request additional or corrected information.
If you become aware of matters that cause the compiled financial information to appear
misleading, and it is not resolved, you are reminded that your provincial Code of Professional
Conduct / Code of Ethics requires that you not associate with such financial information.
(See CSRS 4200 Paras. 30 and A32)

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QUESTION 18
How do I consider what may appear to be misleading in the compiled financial
information?
The way to consider what may appear to be misleading requires that you use professional
judgment, taking into account your knowledge of the entity and the basis of accounting
applied, and the facts and circumstances known to you.
The use of professional judgment requires you to apply relevant training, knowledge,
experience and the ethical requirements that exist within the context of CSRS 4200.
(See CSRS 4200 Para. 15 for the definition of professional judgment and Paras. 21 and A9
on the use of professional judgment)

Issue the Compilation Engagement Report

(See CSRS 4200 Paras. 37 – 38)

After you have obtained acknowledgment from management (or TCWG, as appropriate) that it
has taken responsibility for the final version of the compiled financial information, you can issue
the compilation engagement report. A sample compilation engagement report is included in
Appendix 2 of CSRS 4200 and Appendix B of this Tool.

QUESTION 19
What date do I use on the compilation engagement report?
The date of the compilation engagement report is the date you have completed the
compilation engagement in accordance with CSRS 4200, which includes having management
acknowledge (or TCWG, as appropriate) that they have taken responsibility for the final
version of the compiled financial information.
(See CSRS 4200 Para. 38)

QUESTION 20
Do I have to label the compiled financial information as “unaudited”?
No, CSRS 4200 does not require you to label the compiled financial information as
“unaudited.”
Section 9200 included a requirement to label each page of the compiled financial information
as “Unaudited – See Notice to Reader.” The reason that this requirement is not included in
CSRS 4200 is that such labelling is not a key driver in informing users about the limitations
of the compiled financial information. Consistent with reporting in an audit engagement and
a review engagement, the compilation engagement report is the appropriate way to inform
users of the limitations of the compiled financial information.
(See Basis for Conclusions Paras. 49 and 50)

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QUESTION 21
If management indicated that the compiled financial information is not intended
to be used by a third party, am I responsible for monitoring that management does
not in fact provide the compiled financial information to a third party?
No, CSRS 4200 does not impose obligations on you to monitor the distribution of the
compiled financial information by management after the compiled financial information has
been issued. It is management, not you, that determines the distribution of the compiled
financial information.
There may be circumstances when a third party requests the compiled financial information
(from the client) after you have issued the report, such as when a potential buyer asks for the
entity’s last three years of financial information. As mentioned, you do not control or have to
monitor the distribution of the compiled financial information, you do not have any additional
responsibilities in this situation.
REMINDER: This question addresses the situation where management has indicated that
the compiled financial information is not intended to be used by a third party.
However, you are reminded that the engagement letter (or other suitable form
of written agreement) includes an acknowledgment from management that they
understand that compiled financial information is not to be used by third parties
unless they would meet the following conditions for accepting (or continuing)
the engagement:
• The third party is in a position to request or obtain further information, or
• The third party has agreed with management on the basis of accounting
applied in the preparation of the compiled financial information.
Additional discussion on your responsibilities when, after the compiled financial
information has been issued, and management wants to provide the compiled
financial information to a third party not contemplated when accepting or
continuing the engagement, is included in Paras. 20 to 22 of the Basis for
Conclusions.
(See CSRS 4200 Paras. 25(e)(iii) and A38)

Possible Withdrawal From Engagement

(CSRS 4200 Paras. 31 – 32 and A33 – A34)

CSRS 4200 addresses situations when it may be necessary to withdraw from a compilation
engagement. You are required to withdraw from the engagement if:

• you become aware of matters that cause the compiled financial information to appear
misleading and management does not provide additional or corrected information, or

• you are otherwise unable to complete the engagement.

You may be unable to complete the engagement in the following situations:

• management does not provide you with the records, documents, explanations or other
information needed to compile the financial information

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• a correction is necessary to the compiled financial information and management refuses to

make (or allow) the correction to be made

• you become aware of information that was not known at the time the engagement was accepted
that, had it been known, you would not have accepted the engagement

You may communicate either orally or in writing to management the reason for withdrawing from
the engagement.

If withdrawing from the engagement is not possible under relevant ethical requirements, you may
consider it appropriate to seek advice about what professional and legal responsibilities apply in
the circumstances.

Subsequent Discovery of Facts

(See CSRS 4200 Paras. 34 – 36)

If a fact becomes known to you after the date the compiled financial information has been issued
that, if it was known to you at the date of the compilation engagement report, may have caused
you to believe that the compiled financial information appeared misleading, then:

• Discuss the matter with management (or TCWG, as appropriate);

• Determine whether the compiled financial information needs to be amended; and if so,

• Inquire how management intends to address the matter.

If the compiled financial information is not amended in circumstances where you believe it needs
to be, or if you become aware that management has not taken the appropriate steps to address
the matter, refer to Canadian Standard on Association (CSOA) 5000, Use of the Practitioner’s
Communication or Name, to understand your responsibilities when you become aware of an
intended or actual inappropriate use of your communication or name.

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QUESTION 22
What should I do if management brings to my attention that the compiled financial
information that I have issued is misleading and requests that the compiled
financial information be amended?
If management requests that the compiled financial information be amended and you
provide a new compilation engagement report on the amended compiled financial
information, CSRS 4200 requires that you:
• Prepare the amended compiled financial information, including a note describing the nature
of the amendment, and
• Refer, in the new compilation engagement report, to the note in the amended compiled
financial information that describes the nature of the amendment of the previously issued
compiled financial information and to the earlier compilation engagement report provided
by the practitioner.
In addition, CSRS 4200 requires that you advise management to:
• Inform users in receipt of the previously-issued compiled financial information and the
earlier compilation engagement report that the compiled financial information has been
amended; and
• Provide users with the amended compiled financial information together with the new
compilation engagement report.
An example of the reference to the note in the new compilation engagement report on the
amended compiled financial information follows:
Amended Financial Information
We draw attention to Note X to the compiled financial information, which describes that
the compiled financial information that we originally reported on March 20, 20X2 has been
amended and describes the nature of the amendment of the previously issued compiled
financial information.
Note X
The compiled financial information for the year ended December 31, 20X1 has been amended
to reflect inventory being measured at cost of $100,000 when on the original compiled
financial information, it was measured at cost of $200,000. This amendment was made to
adjust for a correction of the cost of some units. The amendment decreased inventory by
$100,000, increased cost of sales by $100,000, decreased the income tax expense and
payable by $30,000, and decreased net income and retained earnings by $70,000.
(See CSRS 4200 Para. 35)

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Documentation

Documentation
Figure 1 includes the word “Documentation” on the outside of the diagram to represent that documentation is
relevant to all aspects of the compilation engagement. CSRS 4200 establishes the minimum:
• work effort and that all work effort must be documented
• documentation requirements to improve consistency in the level of documentation
The main principle of CSRS 4200 is that the documentation be, in the practitioner’s judgment, sufficient
to enable an experienced practitioner having no previous connection with the engagement to understand
how the requirements of CSRS 4200 were met.
The minimum documentation would include the following:
• the engagement letter or other suitable form of written agreement with management
• a description of the entity’s business, operations, accounting system, accounting records and the
basis of accounting applied and, where applicable, the accounting policies used in the preparation
of the compiled financial information
• a reconciliation of the entity’s accounting records to the compiled financial information, including
any adjusting journal entries or other amendments to the compiled financial information that you have
agreed with management in the course of the engagement
• where applicable, the discussion with management regarding significant judgments for which you
have provided assistance in the course of preparing the compiled financial information
• where applicable, the communication to management regarding matters that may cause the
compiled financial information to appear to be misleading and how management has addressed
these matters
• a copy of the final version of the compiled financial information for which management (or TCWG,
as appropriate), have taken responsibility
• a copy of the compilation engagement report
• the communication to management of the reason(s) for withdrawing from the engagement, where
applicable
Though there are specific requirements, the extent of documentation is ultimately a matter of professional
judgment.
(See CSRS 4200 Para. 39)

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QUESTION 23
How much work effort and documentation are necessary to meet the requirement
to obtain and document my knowledge of the accounting system and accounting
records?
It is a matter of professional judgment!
The sample working paper excerpts for knowledge of entity below include an example of
a description, obtained through inquiry, related to the accounting system and accounting
records.
[See CSRS 4200 Paras. 27(b) and 39(b)]

An example:
The following example provides an extract of possible documentation related to business
operations, accounting systems and records for a simple entity:

Business and Operations

• The company’s principle business is providing engineering services to construction companies with
fees based on time spent.
• Ms. Jackson and two other engineers perform all engineering work, and there is one administrative
assistant / receptionist.
• Nature of assets, liabilities, revenues and expenses:
— Assets include accounts receivable, office furniture, computer equipment and software, and work
in progress.
— Liabilities include accounts payable and accrued liabilities, a demand loan with Canada Bank.
— Revenues include professional fees for engineering services provided, and the major expense is
salary.
• Key advisors: lawyer, bank, insurance broker, bookkeeper [with addresses].
Accounting System and Accounting Records
QuickBooks version 2019
QuickBooks username: [insert]
Transactions recorded by management, staff and contracted bookkeeper: [insert name of bookkeeper]
Output of software used by management include: general ledger, trial balance or system-generated
financial information
Accounting adjustments: Historically, adjustments have been made to accrue certain unrecorded
liabilities; to record depreciation on office furniture, computers and software, work-in-progress; and
the income tax provision. [insert reference to previous file and journal entries, if relevant.][The basis
of accounting could also be added here, and examples are included in Appendix C of this Tool.]
All staff are on salary and payroll records are prepared internally (including T4s/T4 Summary) and
then processed with direct deposit every two weeks
GST filings are completed by the bookkeeper using the Quick Method

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QUESTION 24
Do I have to obtain a management representation letter?
No, there is no requirement in CSRS 4200 to obtain a representation letter from
management.
However, CSRS 4200 requires that you obtain acknowledgment from management (or
TCWG, as appropriate), that it has taken responsibility for the final version of the compiled
financial information, which includes the final basis of accounting applied in the preparation
of the compiled financial information.
REMINDER: This acknowledgment may take different forms, such as:
• a signature on the final version of the compiled financial information
• a written communication (e.g., in paper form, or by electronic or other medium
• an oral acknowledgment documented in the working paper file
(See CSRS 4200 Para. 33)

QUESTION 25
How do I document the reconciliation of the entity’s accounting records to the
compiled financial information?
How you document the reconciliation of the entity’s accounting records to the compiled
financial information, including any adjusting entries or other amendments, is a matter of
professional judgment.
The documentation will include any adjusting journal entries or other amendments to
the compiled financial information that you have agreed to with management during the
engagement. In addition, the documentation may include a note in your working paper file
that describes that:
• The general ledger was imported from the entity’s records and the compiled financial
information agrees to your working paper file,
• You have agreed the compiled financial information to relevant accounting records, such
as the general ledger, or
• You have agreed the compiled financial information to a schedule such as an adjusted
trial balance. This does not mean the adjusted trial balance must be included in the
working paper file.
[See CSRS 4200 Para. 39(c)]

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QUESTION 26

When you assist management with significant judgments, you are required
to discuss the significant judgments and document this discussion. What is
a “significant judgment,” and how would I document this discussion?
What would be considered a “significant judgment” in a compilation engagement depends
on the circumstances. A significant judgment could be making an accounting estimate, such
as the allowance for doubtful accounts, or selecting the revenue recognition policy. What is
significant is a matter of judgment and may be based on the nature and size of the related
item and/or the implications to the users of the compiled financial information.
The objective of the discussion is to have management understand the significant
judgment and their impact on the compiled financial information, and to have them accept
responsibility for the significant judgments included in the compiled financial information.
Documentation of the discussion that indicates management understands the significant
judgment and the impact on the compiled financial information could be in the form of a
narrative in the working paper file. Alternatively, if journal entries are prepared to reflect the
discussion, and are well explained, management could approve the related journal entries to
document the discussion and management’s understanding.
(See CSRS 4200 Paras. 29 and A31)

QUESTION 27
How do I document that management (or TCWG) have taken responsibility for the
compiled financial information?
The acknowledgment from management (or TCWG, as appropriate), that it has taken
responsibility for the final version of the compiled financial information may take different
forms, such as:
• a signature on the final version of the compiled financial information
• a written communication (e.g., in paper form, or by electronic or other medium)
• an oral acknowledgment documented in the working paper file

A possible example of working paper file documentation follows:

Prepared by Engagement Partner
02/15/X1
Do you accept responsibility for the final version of the compiled financial information
for the year-ended December 31, 20X1?
I asked the above question at year-end meeting held on February 15, 20X1, at the
client’s premises, with John Smith answering “yes.”
Alternatively, the discussion may be through email with the response from management
included in the working paper file.
(See CSRS 4200 Paras. 33 and A35)

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What can you do to prepare?

The following steps will help you prepare for these new engagements:

Step 1: Read the new standard (CSRS 4200 including the application material and Basis for
Conclusions).

Step 2: Identify your current and potential compilation engagement clients.

Step 3: Discuss the new standard with management.

Step 1: Read CSRS 4200

The first thing to do is complete a full reading of CSRS 4200, to obtain an understanding of the
requirements. A careful reading of CSRS 4200 will help you understand the requirements and
exactly how the CSRS 4200 may affect you. Also, read the AASB’s Basis for Conclusions for
CSRS 4200. In addition, read the other material identified in this Tool, as needed, including:

• the provincial Code of Professional Conduct / Code of Ethics related to independence disclosure
requirements in a compilation engagement

• Canadian Standard on Association (CSOA) 5000, Use of the Practitioner’s Communication or

Name, to understand your responsibilities when you become aware of an intended or actual
inappropriate use of your communication or name

Step 2: Identify your current and potential compilation engagement clients

The next step is to identify all current and potential compilation engagements. Identify the
engagements that may (or may not) be scoped into CSRS 4200. Reminder: Make sure you include
all practitioners in your office in the discussion to identify all potential compilation engagements.

Step 3: Discuss CSRS 4200 with management

Plan for a discussion with management on what services they require to determine if a compilation
engagement in accordance with CSRS 4200 is the right service for their needs. If CSRS 4200 is
the applicable standard, discuss aspects of the engagement that may be new, such as the basis of
accounting to be applied and the new compilation engagement report that will be issued. (Use the
Management Briefing and Third-Party Briefing to facilitate the discussion, as appropriate.)

Additional Resources
CPA Canada has developed a specific landing page on its website to house additional resources,
which you can find at: www.cpacanada.ca/compilations

In addition:

• Visit the AASB resource page.

• Watch for updates to the Professional Engagement Guide (PEG), expected in August 2020.

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Appendix A – Significant Differences Between CSRS 4200

and Section 9200
This appendix discusses the significant differences between CSRS 4200 and Section 9200 and how
they may affect your practice in the following areas:

• Scope

• Engagement acceptance and continuance

• Performing the engagement (“work effort”)

• Describing the basis of accounting

• Communication

• Documentation

Section 9200 CSRS 4200 Implication

Scope Section 9200 sets out CSRS 4200 sets out CSRS 4200 introduces
some specific exclusions. scope exclusions that further exclusions from
are more extensive than the scope to provide
those in Section 9200. clarity on when the
standard does and
In the circumstances
does not apply.
when CSRS 4200
does not apply, you Some engagements
may decide or be that previously were
requested to issue a completed under
communication on Section 9200 may
the compiled financial no longer be in the
information. In that scope of CSRS 4200.
case, the requirements
of CSRS 4200 apply in
their entirety.
(See CSRS 4200
Paras. 1 – 3)

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Section 9200 CSRS 4200 Implication

Engagement Section 9200 did not CSRS 4200 sets CSRS 4200 introduces
acceptance and include requirements for out conditions for engagement acceptance
continuance accepting or continuing accepting or continuing and continuance
when the the engagement when the engagement requirements to provide
compiled financial the compiled financial that were not in clarity on when it is
information is information is intended Section 9200, relating appropriate to accept or
intended to be used by a third to when the compiled continue an engagement
to be used by party. financial information when there is a third-
a third party is intended to be used party user.
by a third party. To
Note: New engagement
accept or continue
letters must be
the engagement,
prepared. An example of
CSRS 4200 requires that
an engagement letter is
the third party:
included as Appendix 1
• be in a position to
of CSRS 4200.
request and obtain
further information
from the entity, or
• have agreed with
management the
basis of accounting
to be applied
A third party that
does not meet these
criteria may be misled
by compiled financial
information prepared
in accordance with a
basis of accounting that
is other than a general
framework.
(See CSRS 4200
Paras. 22 and 26)

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Section 9200 CSRS 4200 Implication

Performing the Section 9200 provided The performance CSRS 4200 establishes
engagement limited guidance on requirements of the minimum work
(“work effort”) the required work CSRS 4200 are effort requirements. The
effort, which may have more extensive and new requirements will
led to the variability robust than those in improve consistency
in the extent of work Section 9200. of engagement
performed in practice. performance and
The term “misleading”
reflect good practice.
Section 9200 described describes the principles-
Depending on the
the work effort as based threshold that
way engagements
merely arranging you should consider
were completed under
information into the form when performing
Section 9200, there may
of a financial statement a compilation
be a change in the work
and checking that the engagement.
effort.
assembly of information
(See CSRS 4200
is arithmetically correct.
Paras. 27 – 33)
This work effort
was framed around
the practitioner’s
responsibilities to not
be associated with
financial statements
that he or she knows, or
should know, are false or
misleading.

Describing Section 9200 did not CSRS 4200 requires that Attach a new note in
the basis of address or require a the compiled financial the compiled financial
accounting description of the basis information include a information.
of accounting. note describing the basis
(See the discussion
of accounting applied
earlier in this Tool
in the preparation of
and Appendix C
the compiled financial
for examples)
information.
(See CSRS 4200
Para. 28)

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Section 9200 CSRS 4200 Implication

Communication Section 9200 requires Attach a new Attach a new report –

a communication to communication see Appendix B of this
be attached to the entitled “Compilation Tool for the new report
compiled financial Engagement Report.” with some of the key
information entitled differences highlighted.
It includes descriptions
“Notice to Reader”
of the responsibilities
of management and
the practitioner, and an
expanded explanation
of the limitations of
the compiled financial
information.
(See CSRS 4200
Paras. 37 – 38)

Documentation Section 9200 did not CSRS 4200 sets CSRS 4200 establishes
include requirements out aspects of the the minimum
that addressed engagement that documentation
documentation. you are required to requirements. The
document and maintain new requirements will
in the working paper improve consistency
files. among practitioners
in the level of
(See CSRS 4200
documentation.
Para. 39)

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Appendix B – Sample Compilation Engagement Report

Title is aligned with the scope

COMPILATION ENGAGEMENT REPORT
(compile and report) vs. “Notice
To Management of ABC Company to Reader.”

On the basis of information provided by

management, we have compiled the balance sheet of
Addressee is the party who
ABC Company as at December 31, 20X1, the engages the practitioner –
statement management or those charged
of income and retained earnings for the year then with governance (TCWG).
ended, and Note X, which describes the basis of
accounting applied in the preparation of the compiled
financial information [and, if applicable, other Reference to the note in the
compiled financial information
explanatory information] (“financial information”).
that describes the basis of
Management is responsible for the accompanying accounting used to prepare the
financial information.
financial information, including the accuracy and
completeness of the underlying information used
to compile it and the selection of the basis of
accounting. Report now includes
We performed this engagement in accordance with management’s and the
practitioner’s respective
Canadian Standard on Related Services (CSRS) 4200,
responsibilities.
Compilation Engagements, which requires us to
comply with relevant ethical requirements. Our
responsibility is to assist management in the
preparation of the financial information. Clarifies that no procedures
are performed to verify the
We did not perform an audit engagement or a
accuracy or completeness of
review engagement, nor were we required to the information provided by
perform procedures to verify the accuracy or management.
completeness of the information provided by
management. Accordingly, we do not express an
audit opinion or a review conclusion, or provide any No change in the level of
form of assurance on the financial information. assurance.

Readers are cautioned that the financial information

may not be appropriate for their purposes.
The date the practitioner has
[Practitioner’s signature] completed the engagement,
including management’s (or
[Date of the report] TCWG’s) acknowledgment
of its responsibility for the
[Practitioner’s address]
final version of the compiled
financial information.

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Appendix C – Examples of Descriptions of the Basis

of Accounting
An important feature of Section 9200 was that the standard was applied using a broad range of
possible bases of accounting. CSRS 4200 is premised on the same principle and explains that
compiled financial information may be prepared in accordance with different bases of accounting.
Bases of accounting may be established by one of the following:

• an authorized or recognized standards-setting organization

• prescribed by law, regulation or contract

• developed by management

CSRS 4200 requires that you include a note in the compiled financial information describing the
basis of accounting applied in the preparation of the compiled financial information. The purpose
of this note is to assist users in understanding how the compiled financial information is prepared.

Illustrations of bases of accounting commonly encountered in compilation engagements are:

• a cash basis of accounting; for example:

— The financial information has been prepared on the cash basis of accounting. (See
CSRS 4200 Para. A29)

• a cash basis of accounting with selected accruals and accounting estimates:

— See examples below for variations on this basis of accounting within specific industries.

• a basis of accounting prescribed by a contract or other form of agreement established by a

creditor or regulator; for example:
— The financial information has been prepared on a basis of accounting prescribed by the
provision in the contract between ABC Company and the bank of ABC Company. (See
CSRS 4200 Para. A29)

Management may not possess the necessary knowledge to identify the basis of accounting and may
need your assistance. While you may provide assistance, management retains responsibility for the
compiled financial information and the selection of the basis of accounting.

Factors that you may consider in helping management identify the basis of accounting to be applied
in the preparation of the compiled financial information include:

• the nature of the entity

• the intended use of the compiled financial information

• whether there are any specific financial reporting requirements under applicable law or
regulation or contractual provisions with a third party

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The following examples of the cash basis of accounting with selected accruals and accounting
estimates are provided for illustration only:

Example 1: Real estate rental company (included earlier in this Tool and reproduced here for
convenience)
The basis of accounting applied in the preparation of the balance sheet of ABC Company as at
December 31, 20X1 and the income statement for the year then ended is on the historical cost
basis, reflecting cash transactions with the addition of:

• rent receivable based on lease terms less an allowance for doubtful accounts

• revenue-producing property amortized in accordance with amounts allowable for income

tax purposes

• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

• rental revenue recorded in accordance with the lease terms

Example 2: Retail company

The basis of accounting applied in the preparation of the financial information is on the historical
cost basis, reflecting cash transactions with the addition of:

• inventory valued using the retail method

• property, plant and equipment amortized over their useful life

• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

Example 3: Professional services company

The basis of accounting applied in the preparation of the financial information is on the historical
cost basis, reflecting cash transactions with the addition of:

• accounts receivable less an allowance for doubtful accounts

• work-in-progress accounted for on a net realizable value basis

• property, plant and equipment amortized on the same basis as for income tax

• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

Example 4: Agriculture company

The basis of accounting applied in the preparation of the financial information is on the historical
cost basis, reflecting cash transactions with the addition of:

• accounts receivable

• livestock and crop inventory accounted at net realizable value

• property, plant and equipment amortized over their useful life

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• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

Example 5: Investment Company

The basis of accounting applied in the preparation of the balance sheet of ABC Company as at
December 31, 20X1, and the income statement for the year then ended, reflects cash transactions
with the addition of:

• amounts receivable

• investments recorded at cost

• rental property recorded at historical cost and amortized on the same basis as for income tax

• accounts payable and accrued liabilities

• current income taxes payable as at the reporting date

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Appendix D – Communication With Management and Others

Communication with management and others includes formal communications such as the
engagement letter and the compilation engagement report. Other communications, such as inquiry
and acknowledgments, may take place between management, others within the entity and TCWG
(as appropriate). The following table summarizes other required communications.

“HOW”
“WHAT” “WHEN” (Form of communication
(Topic of communication that (Suggested – written, verbal,
is needed) timing) Reference* sign-off, etc.)

Intended use of compiled financial Prior to CSRS 4200 This inquiry can be oral or
information engagement Paras. 22(a) written.
acceptance and 23
Inquiries of management about Documentation of the inquiry
(or
the intended use of the compiled related to the intended use
continuance)
financial information, including of the compiled financial
whether that information is information (and the
intended to be used by a third conditions for acceptance
party. if there is a third party) is
included in the working paper
When the compiled financial
file and acknowledged in
information is intended to be used
the engagement letter (or
by a third party, additional inquiries
other suitable form of written
will help determine whether
agreement).
the third party is in a position
to request or obtain further
information or whether they have
agreed with management on the
basis of accounting.

Independence Prior to Ethical Discussions can be oral or

engagement requirements written and documented in
Inquiry related to independence
acceptance are specified the working paper file using
with the possible disclosure of
(or in detail in a checklist or memo.
any unresolved threats to your
continuance) the provincial
independence being included
and reporting, Code of
in the Compilation Engagement
if applicable. Professional
Report.
Conduct /
Code of Ethics

Expected basis of accounting Prior to CSRS 4200 This acknowledgment

engagement Para. 22(b) can be oral or written.
Prior to accepting or continuing
acceptance
a compilation engagement Include documentation
(or
a practitioner shall obtain of oral acknowledgment
continuance)
acknowledgment from in the working paper file.
management of the basis of
accounting expected to be applied
in the preparation of the compiled
financial information.

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“HOW”
“WHAT” “WHEN” (Form of communication
(Topic of communication that (Suggested – written, verbal,
is needed) timing) Reference* sign-off, etc.)

Knowledge of the entity Performing CSRS 4200 Discussions can be oral or

the Paras. 27, written.
Discussions with management or
engagement A24 – A26
others within the entity who assist Use a checklist or memo to
you in obtaining the knowledge include documentation of the
sufficient to perform the discussions in the working
compilation engagement. paper file.
Note: Obtaining knowledge
is an ongoing process and
can be obtained in ways
other than discussions with
management and others, such
as from prior engagements,
from other engagements and
from your own experience
with the entity’s industry.

Significant judgments (if you Performing CSRS 4200 Discussions with management
provide assistance) the Para. 29 can be oral or written.
engagement,
Discussions with management Use a checklist or memo to
if applicable
about significant judgments include documentation of the
for which you have provided discussions in the working
assistance in the course of paper file.
preparing the compiled financial
information, so that management
understands the impact of the
significant judgments on the
compiled financial information and
accepts responsibility for those
judgments.

Matters that may cause the Performing CSRS 4200 Where applicable, you can
financial information to appear the Para. 31 inform management of
misleading engagement, the matters and request
if applicable additional or corrected
Inform management if you become
information; this can be
aware of matters that may cause
orally or written.
the compiled financial information
to appear misleading; request Use a checklist or memo to
additional or corrected information include documentation of the
and discuss how management has discussions in the working
addressed these matters. paper file.

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IMPLEMENTATION TOOL FOR PRACTITIONERS 41

“HOW”
“WHAT” “WHEN” (Form of communication
(Topic of communication that (Suggested – written, verbal,
is needed) timing) Reference* sign-off, etc.)

Acknowledgment of responsibility Reporting CSRS 4200 The acknowledgement may

for the final version of the Para. 33 take different forms, such as:
compiled financial information • a signature on the final
version of the compiled
You must obtain an
financial information
acknowledgment from
• a written communication
management (or TCWG, as
(e.g., in paper form, or
appropriate), that it has taken
by electronic or other
responsibility for the final
medium)
version of the compiled financial
• an oral acknowledgment
information.
documented in the
working paper file

Facts that become known after After CSRS 4200 Where applicable, discussion
the compiled financial information issuance, if Paras. 34 with management (or TCWG,
has been issued applicable and 35 as appropriate) can be oral or
written.
Discussion with management (or
TCWG, as appropriate) if, after Inquiry of management on
the date the compiled financial how they intend to address
information has been issued, you the matter can be oral or
become aware of a fact that, written.
had you known it at the date of
The advisement to
the compilation engagement
management related to
report, it may have caused you to
amended compiled financial
believe that the compiled financial
information can be oral or
information appeared misleading.
written.
If you determine that the compiled
Use a checklist or memo to
financial information needs to be
include documentation of
amended, inquire of management
the discussion in the working
on how they intend to address the
paper file.
matter in the financial information.
If management requests that the
compiled financial information
be amended, then you need to
advise them to inform the users of
the amendment when providing
them with the amended compiled
financial information.

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“HOW”
“WHAT” “WHEN” (Form of communication
(Topic of communication that (Suggested – written, verbal,
is needed) timing) Reference* sign-off, etc.)

Withdrawing from the If applicable CSRS 4200 The nature of the discussion
engagement Para. 32 and communication of the
reasons for the withdrawal
Communication with management
(and related documentation),
if withdrawal from the engagement
will vary in nature and extent
is appropriate. For example,
dependent on the reason for
withdrawal may be appropriate in a
the withdrawal.
circumstance where management
does not address a matter that (Consider seeking advice on
may cause the financial information any professional and legal
to appear to be misleading. The responsibilities applicable in
reasons for the withdrawal will be the specific circumstance.)
communicated to management.

*CSRS 4200 Para. 39 is the relevant reference for the documentation of how the requirements
of CSRS 4200 are met, including these communications.

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About This Publication

The Research, Guidance and Support group of the Chartered Professional Accountants of Canada
(CPA Canada) undertakes initiatives to support practitioners and businesses in the implementation
of standards.

The views and conclusions expressed in this non-authoritative publication are those of the author.
This publication contains general information only and is not intended to be comprehensive or to
provide specific assurance, business, financial, investment, legal, tax or other professional advice or
services. This publication is not a substitute for such professional advice or services, and it should
not be acted on or relied on or used as a basis for any decision or action that may affect you or your
business.

This publication has not been updated since the publication date of June 2020. Practitioners are
expected to use professional judgment in determining whether the material in this publication
is both appropriate and relevant to the circumstances of each engagement.

CPA Canada expresses its appreciation to the author, Jane M. Bowen, FCPA, FCA, for developing
this Implementation Tool for Practitioners and to the members of the Compilation Engagements
Guidance Task Force for their contribution to its preparation.

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IMPLEMENTATION TOOL FOR PRACTITIONERS 44

Compilation Engagements Guidance

Task Force
Members Stephen Shupe, CPA, CA
Shupe & Company
April Andiel, CPA, CA
Dartmouth, NS
BDO Canada LLP
Lillooet, BC
Michael Frankel, FCPA, FCA Observer
Richter Jennifer McCann, CPA, CA
Montréal, QC Focus ROI
Tom Gillespie, CPA, CA Toronto, ON
Clearline
Vancouver, BC Author
Jules Hawkins, FCPA, FCA Jane Bowen, FCPA, FCA
Hawkins & Co. Accounting Ontario Tech University
Windsor, ON Oshawa, ON
Raymond Mack, FCPA, FCA
Kenway Mack Slusarchuk Stewart LLP Staff
Calgary, AB
Yasmine Hakimpour CPA, CA
Annie Smargiassi, CPA, CA CPA Canada
CPA Quebec
Montréal, QC Taryn Abate, CPA, CA, CPA(IL)
CPA Canada
Svetlana Berger, CPA, CA, MAcc
Auditing and Assurance Standards Board

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IMPLEMENTATION TOOL FOR PRACTITIONERS 45

Comments on this Audit & Assurance Implementation Tool or suggestions for future publications
should be sent to:

Yasmine Hakimpour CPA, CA

Principal
Audit & Assurance
Research, Guidance and Support
Chartered Professional Accountants of Canada
277 Wellington Street West
Toronto ON M5V 3H2
Email: [email protected]

DISCLAIMER
This publication was prepared by the Chartered Professional Accountants of Canada (CPA Canada) as non-authoritative guidance.
CPA Canada and the authors do not accept any responsibility or liability that might occur directly or indirectly as a consequence of
the use, application or reliance on this material. This Implementation Tool has not been issued under the authority of the Auditing
and Assurance Standards Board.
Copyright © 2020 Chartered Professional Accountants of Canada

JUNE 2020 (RE-PUBLISHED FEBRUARY 2023)