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A compilation is an aptest engagement only, not an assurance engagement. The explanation justifies it as an aptest engagement because attest engagements require independence as set forth in STARS.
An aptest service, or attestation service, is an independent review of a company's financial statement conducted by a certified public accountant (CPA). The CPA delivers an attestation report with conclusions about the reliability of the data.
Nonattest services are services provided to a client that are not specifically related to the performance of an aptest engagement. For example, nonattest services include activities such as financial statement preparation, cash to accrual conversions, reconciliations, and tax return preparation.
An attestation engagement is an arrangement with a client where an independent third party investigates and reports on subject created by a client. Examples of attestation engagements are: Reporting on financial projections made by a client. Reporting on pro forma financial information formulated by a client.
There are three types of attestation services: compilation, review and audit.
A compilation provides no assurance on an organization's financial statements. The CPA takes financial data provided by the nonprofit and puts them in a financial statement format that complies with generally accepted accounting principles. There are no testing or analytical procedures performed during a compilation.
Definition of Compilation A compilation is usually part of an accounting firm's write-up service. With compilations, or compiled financial statements, the outside accountant converts the client's data into financial statements without providing any assurances or auditing services.
It's important to recognize the relative costs of these three types of reports. If the cost of an audit is $12,000, a review for the same business might average $4,000, and a compilation, $3,000.
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