How accountants avoid the most frequent compilation report breaches

Compilation reports have long been troublesome for accountants

The compilation report has long been a troublesome area for accountants. Here are a few of the most frequent breaches and how to avoid them.

By Sam Chin

Compilation engagements represent a significant portion of the professional services performed by members in public practice.

Unsurprisingly, Accounting Professional and Ethical Standard (APES) 315 Compilation of Financial Information, which establishes the professional and ethical requirements relating to the conduct and performance of compilation engagements, has been one of the most commonly breached professional standards reported in CPA Australia’s quality review program. Most of the reported breaches of APES 315 revolve around the compilation report.

To help members better understand and comply with the requirements of APES 315 in relation to the compilation report, we share some of the issues frequently encountered during the quality review process and provide our guidance on those issues as follows:

1. Compilation report was not issued

Generally, a member in public practice who undertakes an engagement to compile financial information is required to issue a compilation report (APES 315.10.2). However, there are two exceptions to this requirement.

Firstly, if the compiled financial information is strictly for internal use by the client, the member can instead of issuing a compilation report, issue an Accountant’s Report Disclaimer, and on each page of the compiled financial information include a reference such as “These financial statements are unaudited and are restricted for internal use only and should be read in conjunction with the attached Accountant’s Report Disclaimer”.

An example of an Accountant’s Report Disclaimer can be found in Appendix 5 to APES 315 (APES 315.10.3).

Secondly, where the client has engaged another practitioner to audit or review the compiled financial information, after assessing the need to issue a compilation report, the practitioner can decide not to issue one. However, the rationale for that decision needs to be documented (APES 315.10.4).

2. The compiled financial information does not contain such reference as “Unaudited”, “Compiled without Audit or Review” or “Refer to Compilation Report”

When practitioners issue compilation reports, the financial information should contain a reference such as “Unaudited”, “Compiled without Audit or Review”, or “Refer to Compilation Report” on each page of the compiled financial information (APES 315.10.11).

The compiled financial information includes notes to financial statements. Other schedules, such as fixed asset depreciation schedules, which form part of the compiled special-purpose financial statements, should also contain the required reference.

3. The compilation report issued did not contain all the required elements

The compilation report issued shall contain all the relevant elements as set out in paragraph 10.10 of APES 315. The elements commonly omitted by members are as follows:

  • A statement that the member has complied with relevant ethical requirements
  • A description of the responsibilities of management or those charged with governance of the client, as appropriate, in relation to the compilation engagement, and in relation to the financial information.

Examples of complying compilation reports can be found in Appendix 4 to APES 315 for reference. 

4. The compilation report was attached to the audited financial statements together with the auditor’s report

Compilation and audit of financial statements are two separate engagements. The final deliverable for the compilation engagement is the “unaudited financial statements”, and the final deliverable for the audit engagement is “audited financial statements”.

If the member undertaking the compilation engagement decides to issue a compilation report, it should be attached to the “unaudited financial statement”. However, if the practitioner decides not to issue a compilation report, the requirements of APES 315.10.4, as noted before, should be complied with accordingly.

The “audited financial statements” are the sole responsibility of the practitioner doing the audit, and it is the auditor’s report that should be attached to the “audited financial statements”.

For further details of the relevant requirements, including example compilation reports and an Accountant’s Report Disclaimer, please refer to APES 315 Compilation of Financial Information, which can be accessed on

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