Canada has issued a new standard for compilation engagements (CSRS 4200)

The accounting profession regularly reviews and updates its standards as part of its goal to provide users of financial information with clear and reliable statements. The Audit and Assurance Standards Board of Canada has issued a new standard for compilation engagements (CSRS 4200) that will take effect for year-ends ending on or after December 14, 2021. The changes will impact the majority of our corporate clients who previously received financial statements to which a “Notice to Reader” was attached.

The new standard will impact the work we do for you when we are engaged to help you complete your year-end financial statements and related tax returns where we aren’t otherwise performing a review or audit engagement. The new standard will require us to spend more time when completing a compilation engagement. The standard setters believe that the new standard will help users of compiled financial information have a better understanding of the level of work we have performed as well as the underlying basis of the compiled financial information. Some of the changes are summarized below

1) USERS: One of the main changes will require Bluenose Accounting to ask you about the intended use of the compiled financial information including whether that information may be used by a third party. If you may be providing the information to third parties, we must understand who the users are before we accept the engagement. A common third party would be your lender who is often a bank.

2) BASIS OF ACCOUNTING: Management, with our assistance, is required to select a basis of accounting and make disclosure in a note to the compiled financial information. This will assist users in understanding how the compiled financial information was prepared. Prior to the introduction of the new standards, it was generally accepted that financial statements generated under a compilation engagement were prepared primarily for tax purposes and no accompanying note on the basis of accounting was required. Statements prepared under a review or audit engagement for smaller private companies have previously been, and continue to be, required to follow an accepted accounting standard most commonly the Canadian accounting standards for private enterprises (ASPE). An example of an accounting policy note disclosure is as follows:

The basis of accounting applied in the preparation of the balance sheet of OpCo Inc as at December 31, 2021, and the income statement for the year then ended, is the historical cost basis and reflects cash transactions with the addition of:

  • Amounts receivable
  • Property and equipment recorded at historical cost and amortized in accordance with amounts allowable for income tax purposes
  • Accounts payable and accrued liabilities
  • Current income taxes payable as at the reporting date
  • Where the financial information is intended for use by third parties, the third parties will have to either:
  • Agree with the basis of accounting, or
  • Be in a position to request or obtain additional information from you

We may be unable to complete an engagement where neither of these criteria are met.

3) ADDITIONAL PROCEDURES: Bluenose Accounting will need to discuss and document our understanding of your business and operations, the nature of your accounting systems and the maintenance of your accounting records in more detail than previously required. Any significate estimates or judgements that Bluenose Accounting assists you with, such as a provision for bad debts for example, will need to be discussed with you so that you are able to accept responsibility and understand the impact of these matters on the compiled financial information.

4) NEW REPORT FORMAT: The previous ‘Notice to Reader’ report in replaced by the Compilation Engagement report. A sample report will be included in the new engagement letter that we will be providing to you. The new report provides greater detail as to the specific responsibilities of Bluenose Accounting as your accountant and management. A compilation engagement still provides no assurance on the compiled financial information.

The above summary is merely an overview of the changes under the new standard for compilation engagements. You should expect to receive an new engagement letter prior to us starting the engagement along with questions as described above. We welcome any questions you have on how these changes will impact the year-end reporting process.

Management Briefing
Third Party Briefing
Filed in: Advice Articles
Author
PREVIOUS
Register for Your CRA Accounts & Approve CRA Authorization
NEXT
New Trust Reporting Requirements - UPDATE

Categories

Privacy Policy

Bluenose Accounting (the “Firm”) is committed to maintaining the confidentiality, security and accuracy of your personal information. The Firm collects uses and discloses personal information related to its clients and employees to the extent required to provide requested services for those clients, to fulfill its professional responsibilities and operate its business. We are committed to protecting the privacy of information in our possession and control. To that end, the Firm has established a Privacy Policy to protect the privacy rights of its clients, employees and others. The Firm’s Privacy policy sets out principals and guidelines it follows in order to meet its privacy commitments and complying with provincial and federal privacy legislation. This policy relates to the collection, use and disclosure of personal information by the firm, its partners and employees.

What is Personal Information?

The firm defines personal information as any information that the firm receives as a part of servicing individuals, or indirectly, through clients that are organized as corporations, not-for profit organizations, charities or other like organizations in addition to information related to its employees and partners. Such information would include, but is not limited to, names, addresses, telephone number, age, sex, marital status, identifying numbers, education status and medical history. A more detailed definition can be found in the Freedom of Information and Protection of Privacy Act of Nova Scotia. The Firm only collects information required to provide the services requested and agreed upon. Such information is contained as required within filings with government agencies or as part of its working papers as required by professional standards, rules of professional conduct and regulation.

The Firm’s Commitment

The Firm has established and put into place policies and procedures designed to protect personal information. The firm has communicated to its partners and employees its policies with respect to privacy and has established responsibilities for all individuals with access to private information. The firm has designated Anthony Fielding Ph.D., CA (anthony@bluenoseaccounting.com) as its Privacy officer.

Consent

Information provided to us, including that collected from our website, is used solely for the purpose of the service(s) indicated and is often, but not always, set out in its engagement letter. Should you advise us at any time that you no longer consent to the use of the personal information that you have provided to us, we will take your information off our database.

Safeguards

The Firm protects the privacy of personal information in its possession by using security safeguards appropriate to the sensitivity of the information. Such safeguards include physical restriction (locked premises and security systems) and electronic protection (password protection and encryption).

Legal Disclaimer

Although we make every effort to preserve user privacy, we may need to disclose personal information when required by law when we have a good-faith belief that such action is necessary to comply with a current judicial proceeding, a court order or legal process.

Other Use of Your Information

Except as set out in this Privacy Policy, we do not make any other use of the personal information which you provide to us unless you have consented to its use for any other purpose. We do not sell or disclose your personal information to anyone, except as required by law.

Website

In using our website, you consent to the collection, use and disclosure of your personal information in accordance with this Privacy Policy.

×

Terms of Use

Terms of Use

The use of this web site is governed by the terms and conditions as set out below. By using this web site, you have agreed to be bound by these terms.

Copyright

The information contained within this site, including the underlying HTML, text, images and any other content is the property of Bluenose Accounting (the “Firm”). Any reproduction or redistribution of content of this site without the express written permission of the Firm is strictly forbidden.

Disclaimer

The information provided in this site is free of charge and is for information purposes only. Such information should not be relied upon or used as a basis for decisions. The Firm has made all efforts to maintain the accuracy of the content of this web site. Information provided on this web site is provided without any warranties of any kind. The Firm assumes no responsibility or liability for damages that may arise from the use of this site or of any information contained within.

External Links

The Firm may provide external links to third party sites and some content provided on this site may actually be from third party sites. The Firm assumes no liability for the accuracy of third party information contained within this site or in those reached through links contained within this site. Any links are provided for information purposes only and are not to be construed as an endorsement by the Firm. The Firm has not reviewed or otherwise attempted to verify the accuracy of information contained within such sites.

The Firm assumes no responsibility or liability for damages that may arise from the use of these links including any computer security issues such as, but not limited to, viruses, Trojan horses or other disruptive code which may be downloaded or transferred from such linked sites.

Acknowledgement

By using this site, you are agreeing to the terms and conditions as set out above. Any use of information contained within this site is not to be construed as professional advice and the use of such information does not relieve you from applying the standard of care and due diligence relevant to the use of such information contained in this web site. You are solely responsible for verifying the accuracy and reliability of all information contained within this web site.

×