New compilations standard CSRS 4200 will impact former “Notice to Reader” engagements.
Who does this impact?
If you have previously had Virtus Group issue a “Notice to Reader” report on a set of financial statements, a new standard issued by CPA Canada will affect our engagement with your company or organization and the appearance of our reporting. The new standard is called CSRS (Canadian Standards on Related Services) 4200 – Compilation Engagements and is effective for compiled information for periods ending on or after December 14, 2021.
Why is it changing?
The objective of the standard is to not only help practitioners in performing compilation engagements but also to more clearly communicate to users of financial information the responsibilities of management and the practitioner and the nature and scope of the engagement.
It will be important for us to understand how the financial information being compiled is being used, in particular, if it is used by third parties such as a bank or shareholders. If there is no third-party use, there may be circumstances where no compilation report is needed on the information, such as when the engagement is limited to bookkeeping or if the financial information is used only for a tax filing.
What is changing?
If a report is needed on the information, the report will look different than the old report. It will be called a “Compilation Engagement Report” and not a “Notice to Reader”. It will be longer and have more information, including the responsibilities of both management and the practitioner and will specify that an audit or review engagement was not performed. It will refer to “financial information” rather than “financial statements”. The financial information will no longer say “Unaudited – See Notice to Reader” on it. Finally, there will be a note to the financial information that specifies the basis of accounting. We can assist in defining the basis of accounting for the note, but management must concur that the basis is appropriate.
If you would like more information on whether or how this standard affects our engagement with your company or organization, please reach out to a member of our team for further details.
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