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Serge Huot, CA1330 Inge CrescentNavan, ONK4B 1M7
January 31st, 2011
International Auditing and Assurance Standards Board (IAASB)
London, UK
(Through Web Site at: www.ifac.org)
Subject: Compilation Engagement - Proposed ISRS4410
General Comment
A compilation report by a practitioner over a set of financial statements must not provide (at least it is
not supposed to) any assurance over a set of compiled financial statements. This is a basic tenet of a
compilation engagement that should not be compromised whatsoever. It is my view that the proposed
revisions to the IRFS4410 will do so with, among other elements, its proposed requirements calling for
much more information being presented in the practitioner's compilation report.
With this proposal, it seems to me that that IAASB is trying to enhance the value of compilation
engagements through a) more disclosure in the practitioner's report and in the compiled financial
statements and b) with the establishment of quality controls over such engagements. This is going the
wrong way.
Specific Comments
While it is certainly useful to know the intended use of the compiled financial statements, I do not agree
that it has to be a requirement. I believe the indented use and rationale for such engagements is
implicit for the vast majority of them. Indeed, I believe that the vast majority of clients requiring such
engagements (compilation offinancial statements) are owners of small entities, either incorporated or
not, with limited accounting knowledge and resources. In most cases, these clients just want to know,
at the least cost, the financial results for their last fiscal year and to be able to use that information for
preparing their various tax returns to be filed with their governmental authorities.
As stated earlier, there should be no assurance whatsoever over a set of compiled financial statements.
I disagree with introducing the notion of special purpose; there should only be general purpose
compiled financial statements. Introducing a notion of a compilation for a <special purpose> would
lead, in my view, the reader to implicitly assume that there is a certain degree of assurance over the
compiled information; especially if such purpose is stated or referred to in the practitioner's compilation
report. Neither should that report identify the reporting framework used; however, that information
may be disclosed in a note to the financial statements. On the other hand, I agree with the proposal
that the financial reporting framework should be identified in the engagement letter.
Telephone / phone: 613-835-2964 Telecopie / fax: 613-835-3016
The proposal calls for the practitioner to obtain management's acknowledgment of its responsibilities as
a pre-condition before accepting a compilation engagement; it claims that it is an important factor in
mitigating the risk of being associated with information that is materially false or misleading. I disagree
with the conclusion that such an acknowledgment would do so. However, specifying management
responsibilities with regard to providing the necessary information to the practitioner is a good practice.
It is my view that <Quality Control> should be in place for assurance engagements (audit and review);
compilation engagements are not assurance engagements. Therefore, I do not agree that such
engagements be subject to the requirements of International Standards on Quality. I believe that the
use of an appropriate basic checklist is sufficient.
I agree with the proposed documentation requirements. I believe that these requirements are already
met in practice.
Practitioner's Compilation Report. As already alluded before, I do not agree with expanding the
compilation report by providing more information on the practitioner's involvement and on the
reporting framework used as I believe this may lead to a reader to assume a certain degree of assurance
over the compiled financial statements. As stated earlier, there has to be no assurance at all being
provided over compiled financial statements and, as a result, no unnecessary additional information
should be added to the report that may confuse the reader or that he may misinterpret. I support the
idea to identify the addressee which should always be <management>.
Telephone / phone: 613-835-2964 Telecopie / fax: 613-835-3016