Stockholders, creditors, and private investors often need assurance that financial statements accurately represent the true financial position of a company.
Compilation - Lowest Level of Assurance
In compiling financial statements for a client, I present information that is the "representation of management" and expresses no opinion or assurance on the statements. Compilations don't require inquiries of management or analytical procedures. Instead, I rely on my knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent Accountant or CPA as part of their lending covenants.
Which Report Should You Use?
Each type of financial statement report may suit specific circumstances, depending on requirements from your client's bank or other parties, as well as meet budgetary needs.