There’s a New Compilation Standard in Town 0

Posted On March 17, 2022, by Admin

Some things are set in stone, but the Canadian compilation standard is not one of them. After nearly 35 years, the Auditing and Assurance Standards Board (AASB) has issued a new standard for compilation engagements. If you’re a business owner and typically hire a practitioner to compile your financial information, you should be aware of these changes.

Stay with us to learn more about the new compilation standard — the reasons behind the recent revisions, their benefits, and how they affect you.


New Standard for Compilation Engagements

The Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements, was introduced last year. The new standard replaced the 1987 Section 9200 (Notice to Reader), Compilation Engagements and Assurance and Related Services Guideline AuG-5, Compilation Engagements – Financial Statement Disclosures.

The novel CSRS 4200 has brought numerous changes, including performance and reporting requirements. This standard clearly specifies what services fall under its scope and requires less documentation.

The CSRS 4200 Compilation Engagements standard went into effect on December 14, 2021. However, earlier applications were permitted.


Why Has the Compilation Engagement Standard Changed?

There are a couple of reasons why the Section 9200 standard for compilation engagements had to be changed:

  • Informational value— One of the motivations behind the modification in the compilation engagements standard lies in its informational value. Namely, the old standard was based on the presumption that the compiled financial information would only be used by management. However, third parties, such as lenders, frequently rely on the same information in practice. So, adjustments have been made to fit both the needs of these third parties and management.
  • Scope of work — Practitioners had difficulty determining what fell under the scope of the old standard, including the amount of work and the level of documentation required. The new standard addresses the nature of compilation engagements more clearly.
  • Issues of responsibility— The third parties that used the compiled financial information experienced difficulties identifying the practitioner’s and management’s responsibilities. The new standard clarifies both of these issues and tackles the limitations of the collected financial information.
  • Basis of accounting description — The old compiled financial information report didn’t have to follow a general-purpose accounting framework. As a result, users had difficulties determining the basis of accounting used in the preparation of that financial information. The new standard requires compilation engagements to have a note on the basis of accounting applied.


Differences Between CSRS 4200 and Section 9200

The following paragraphs outline the main changes the new CSRS 4200 introduces in terms of reporting and performance requirements. You can go through each one to determine how your compiled financial information will be affected.


The new standard narrows the scope of services included in the compilation engagement. It outlines what services are excluded and clarifies the conditions under which those exemptions apply.

For instance, a compilation engagement report does not have to be completed or issued if your financial information will only be included in the government-prescribed income tax return forms.

Mind that your practitioner can still complete a compilation engagement regardless of the scope exclusions under the CSRS 4200 if the management (you) desires the practitioner’s communication attached to the compiled financial information.

Engagement Acceptance or Continuance Conditions

Before your practitioner accepts and continues a compilation engagement, the new CSRS 4200 compilation engagements standard requires the following:

  • They (the practitioner) must consult with you (the management) about the use of the compiled financial information. That is, ask you whether the compiled financial information will be used by a third party. If so, the management must confirm that:
  • The third-party is authorized to request and obtain the said information, and
  • The management(you) has agreed with the said third party on the basis of accounting to be applied

The only other condition under which the practitioner can accept or complete a compilation engagement if neither term has been met is if the basis of accounting is a general-purpose framework. However, you (the management) must consider whether a review or an audit engagement would better suit the users’ needs.

Basis of Accounting Description

The new standard requires that your compiled financial information contains a note on the basis of accounting applied during the preparation process. The note is supposed to help users, including third parties, comprehend a bit more about the entire process of generating the information.

It can be beneficial to discuss the accounting basis with the third party/users of the compiled financial information beforehand to determine whether it meets their needs.

Once you have established the basis of accounting, your practitioner will ask you (the management) to acknowledge this selection. You will also have to sign an engagement letter that confirms that you (the management) and your practitioner agree on all the following terms of engagement:

  • Objective and scope of the engagement,
  • Intended use of the compiled financial information,
  • Acknowledgments defined in the new standard,
  • Your responsibilities, and
  • Practitioner’s responsibilities.

Additional Requirements

Apart from preparing the engagement acceptance and the engagement letter, your practitioner will have to:

  • Gain knowledge about your business, operations, the accounting system you use, and your accounting records.
  • Examine significant matters, like which policy to choose or making an accounting estimate. This discussion will help you understand the compiled financial information judgments/adjustments well enough to take responsibility for them.
  • Prepare and read the compiled financial information to understand the accounting basis and your business and ensure that the compiled financial information doesn’t appear misleading.
  • Discuss the inclusion or correction with you if the compiled financial information seems inaccurate.
  • Obtain your (the management’s) acknowledgment of the compiled financial information.
  • Document their work effort following the CSRS 4200

Compilation Engagement Report

The new standard introduces a new format of the compilation engagement report, too. The new document should include the following items:

  • Description of your (the management’s) and your practitioner’s responsibilities,
  • Documentation scope and its nature,
  • Reference the note discussing the basis of accounting applied,
  • Outline of the level of assurance, and
  • Your (the management’s) acknowledgement of accountability for the finished version of the compiled financial information.


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This blog is not meant to provide specific advice or opinions regarding the topic(s) discussed above. Should you have a question about your specific situation, please discuss it with your GBA advisor.

GBA LLP is a full-service accounting firm in the Greater Toronto Area, but we primarily service all of Ontario as well as the rest of Canada virtually, except Quebec. Our team of over 30, provides Audits and Reviews of financial statements, and Compilations of financial information, as well as corporate tax returns.  We provide specialized corporate tax and succession planning for small and medium businesses, in addition to general advisory services. If you would like to schedule a call to discuss your accounting or tax needs with one of our team members, please complete the free no obligation meeting request on this page.

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