CSRS 4200 Compilation Engagements: Should there be a reference to the note(s) on the financial statements?

As we continue to work through implementation of CSRS 4200 Compilation Engagements (CSRS 4200), we are sharing our frequently asked questions (FAQs).  In our third post, we will address the inclusion of a reference to the notes on the statements.

If you missed our first two posts addressing terminology being used including financial information and management acknowledgements you can find these on our blog.

Much of the difficulty with the adoption of the new compilation engagement standard stems from variation in practices under the previous notice-to-reader (NTR) standard.  One of these variations was the inclusion of note disclosures in a NTR.  For firms who did include note disclosure under NTR’s you may have also included a reference to these notes on the balance sheet and income statements such as:

The notes form an integral part of the unaudited and unreviewed financial information

As you might suspect this reference was never a requirement, as there was no underlying requirement to include note disclosures unless the financial statements were misleading, but there was also no prohibition from including this reference. 

Under CSRS 4200, we find ourselves in the same position. In considering this remember that the financial statements are managements not the firms, and as such if management wished to include this reference the question you would need to ask yourself is whether the inclusion caused the financial statements to be misleading.  I would suspect the answer here is no.  So that leaves us with no requirement to include the reference however there is also no prohibition should you wish to do so.  In making your decision, I might point out that the Compilation Engagement Report already includes reference to Note 1 which is why here at Clearline CPA we are not inclined to include this reference on the financial statements.

Please share this blog with your colleagues as we continue to work through the implementation of the new standard. 

Visit our online store if you are looking for CSRS 4200 Compilation Engagement resources or contact us if we can be of assistance. 



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