Hi, I’m Zach with Gary Booth Chartered Accountants. I’d like to go over a question we’re often asked by small business owners; what is the difference between a compilation and a review? <br />First of all, a review is a limited assurance that the financial statements conform to generally accepted accounting principles. There is an extensive analysis of the financial statements, including the cash flow, which is typically unnecessary with a compilation. More in-depth procedures are required and notes to the financial statements are prepared. This includes examining each item in the balance sheet and income statement and comparing them on a year to year basis for any potential discrepancies. Reviews are normally required when a company has bank loans or depending the specific nature of the organization. <br />On the other hand, a compilation, or notice to reader, has no disclosure or presentation requirements. That is, it is just a compilation of a company’s financial statements.As accountants, we provide no guarantee on the reliability of the information. Because of this, compilations are generally only used for managerial or tax purposes. <br />If you are unsure if your company requires a review, you can contact us at garybooth.com or 416-626-2727.
