The new Handbook Section CSRS 4200 Compilation Engagements was released on the weekend and is now officially in the Handbook. First and foremost, a point of clarity – the section is effective for periods on or after December 14, 2021, that is effective for fiscal years ending December 31, 2021. I had a typo in my January update. My apologies and thanks to the eagle eyes that pointed this out.
CPA Canada summarized some of the key features, designed to respond to stakeholder input and public interest issues as follows:
A scope that sets out which services are compilation engagements. Today, practitioners find it difficult to distinguish a bookkeeping service from a compilation engagement. The new standard clarifies that a bookkeeping service may result in system-generated financial information. Such information is excluded from the scope of the standard if no communication is included or attached to it.
Specific engagement acceptance considerations that apply when the compiled financial information is intended to be used by a third party. Currently, practitioners are unclear about whether it is appropriate to accept or continue a compilation engagement when there is a third-party user.
Specific required work effort and documentation. The lack of explicit guidance in this area could be a reason for the existing variability in practice.
A requirement that compiled financial information includes a note describing the basis of accounting that was applied. Today, users generally lack an understanding of how the compiled financial information was prepared.
A new compilation engagement report that is more informative and insightful than the current Notice to Reader. Users are unclear as to the extent of work performed by the practitioner and have asked for greater transparency about those responsibilities.
Even though the standard is not effective for some time, there are a number of activities you can undertake already to be prepared. These include:
Read the actual standard and the Basis for Conclusion (both in Knotia).
Read CPA publications and other material issued as these help promote awareness, understanding and effective implementation (two links below of material already issued).
Consider how the standard impacts your current engagements.
Design an implementation plan – there are certain requirements that may make sense to start implementing in this current year so everything does not hit all at once when effective.
Talk to your clients.
Below are links to guidance and information to help you get started.