New Standard for Compilation Engagements (CSRS 4200)New Standard for Compilation Engagements (CSRS 4200)

For the majority of our corporate clients, we perform a compilation engagement to prepare financial statements and a corporate tax return.  You may be familiar with a compilation engagement being referred to by the title of the report under the previous standard – “Notice to Reader”. The standard for compilation engagements has been updated and we would like to bring the changes to your attention.

When is the Standard Effective?

The new standard, CSRS 4200, Compilation Engagements,  is effective for compiled financial information for periods ending on or after December 14, 2021, although early adoption is allowed.

Why was a Change Needed?

The change was needed because:

  • there was often a misunderstanding by users of compiled financial information as to the extent of work performed by the practitioner in compilation engagements
  • the compiled financial information provided no information as to the basis of accounting applied in its preparation

The new engagement report more clearly communicates the respective responsibilities of management and the practitioner, and the nature and scope of a compilation engagement. The compiled financial information will also include a description of the basis of accounting used in its preparation.

What is the Basis of Accounting that must be Described?

In order to improve understandability, the compiled financial information will now include a note describing the basis of accounting applied in its preparation. The description of the basis of accounting will depend on the circumstances of the engagement.

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

  • 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, which could be one area of discussion you could have with management

What changes can you expect in a Compilation Engagement?

  1. We will ask you whether the compiled financial information is intended to be used by a third party (e.g. your lender) and whether the third party has access to additional information.
  2. A discussion about the expected basis of accounting.
  3. new engagement letter
  4. A discussion of your business and operations, accounting system and accounting records.
  5. A discussion about significant judgements that we have assisted management with in the preparation of the compiled financial information.  (e.g. determining an allowance for doubtful accounts)
  6. The inclusion of a description of the basis of accounting in your compiled financial information.
  7. The new compilation engagement report will be attached to your compiled financial information.

Value of a Compilation Engagement

The value of compilation engagement results from a Chartered Professional Accountant include:

• assisting you in the preparation of the compiled financial information in accordance with a basis of accounting, with this basis of accounting being included in a note in the compiled financial information
• complying with professional standards, including relevant ethical requirements
• issuing a compilation engagement report that clearly communicates the nature and limitations of the engagement as well as the practitioner’s and your responsibilities

Is there Assurance Provided in a Compilation Engagement?

No. Like previous compilations completed, a compilation engagement under the new standard does not provide any form of assurance on the compiled financial information. If any assurance is required you will need to determine if a review engagement or an audit engagement would be appropriate for your needs.

Additional Information and Resources

CPA Canada has prepared two documents to help explain the changes and the impact of this new standard when we perform an compilation engagement for you. The management briefing is intended for business owners to provide detail information on the changes and what to expect.  The third-party briefing is intended to be provided to any third-party users of your compiled financial information, such as a lender or bonding agency.

Click these links to download the pdf files.

For additional information you can go to the following CPA Canada and CPA Alberta websites:


We trust you enjoyed reading this article “New Standard for Compilation Engagements (CSRS 4200)”. If you have any questions relating to this post or any other accounting or tax topics, please feel free to contact us at 403-509-3290 or

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