Compiled financial statement(s) help put the health and success of your business in perspective. Here to answer some common questions about the process is Cynthia L. Hintz, CPA Audit Manager with Huberty CPAs.
Q: What is a Compiled Financial Statement?
First, some context. Depending on the client’s needs, there are three levels of service a client could require of a CPA: Compilation, Review, and Audit. Of the three, a compilation requires the least amount of time.
In creating a Compiled Financial Statement, the accountant assists management in presenting financial statements. What the compilation covers will depend on the client’s needs. It could be an individual statement, or it could be a complete set of financial statements. It might or might not include disclosures.
Q: How does a CPA firm generated compilation benefit small and medium sized businesses?
A Compiled Financial Statement can help put a client’s financial development into perspective. It can show how they reached their present status, and help estimate and plan the direction they’d like to go.
For example, a Balance Sheet provides a snapshot of the business. An Income Statement shows the client’s profitability for a defined period. A Cash Flow Statement documents where the cash comes in, and how it is spent.
Q: Is there a standard method that you use during the compilation process? Or is each case completely different and independent of any other?
The procedures in creating a Compiled Financial Statement are well-defined and cover every aspect of the process. However, clients definitely have unique needs, so we’d never apply a cookie-cutter approach.
Whether or not a client has ever had financial statements prepared before will determine where we start the process. We start by requesting (or creating) a trial balance sheet. We will reconcile and adjust certain accounts, if requested to do so, or if we find it necessary. We will then prepare the financial statements and/or disclosures.
Q: What is required of the business/business owner(s) in order for a Compiled Financial Statement to be completed?
To ensure that this process takes no more time (and thus money) than necessary, the business can prepare by:
▪ Plan and schedule time for company staff to work with CPA ▪ Accumulate and categorize relevant correspondence throughout the year (regulatory, ownership, etc.) ▪ Have available all information on fixed asset additions and disposals; debt and leasing arrangements; lawsuits; complex transactions; technology; major customers and/or vendors ▪ Ensure that general ledger accounts are reconciled, or discuss with CPA if assistance is needed
Q: What are the typical or average costs associated with the compilation process?
At the most basic level, a compilation with no significant bookkeeping assistance, and no footnote disclosures, would be in the $750 to $1,000 range. If such assistance is needed, or if the financial statements are complex, the cost can go upwards from there, into the $6,000 range. I have seen compiled financial statements go as high as $12- to $15,000 but, in my experience, that’s very unusual.
Cyndi Hintz has a BBA in Accounting & Management Information Systems. She is the Audit Manager at Huberty CPAs Fond du Lac, WI location.