As the name implies, a compilation involves gathering data and presenting it in the form of financial statements. Unlike audited and reviewed statements, compiled statements may or may not include required note disclosures. Compilation procedures are very limited and do not include the type of analysis performed in a review. Selecting the right service Most small businesses will not receive the best value from an audit. Outside parties generally understand audits are not a viable alternative and, consequently, seldom require them.
Compilations are the most popular service for small businesses.
As a rule, they are cost-effective and require minimal time and effort for the business. Depending on the financial health of the business and other factors, many lenders and investors will accept a compilation. Reviews are becoming increasingly popular because they provide both the business and outside parties with at least limited assurance at a cost that is usually much less than an audit. The most important benefit often results from disclosure in the notes of matters such as lease commitments, contingencies and details of long-term debt and borrowing. Key factors to consider An outside service, such as a bank, might require a particular level of service and, therefore, make the decision for you.