Auditing - What are Compilations

The video explains compilation services provided by auditors, which involve assembling financial statements without assurance. It contrasts compilations with audits and reviews, highlighting that auditors do not perform test work. Clients who struggle to prepare their own financial statements may seek compilations. While some organizations may not accept compiled statements, they can be used for loan applications at small local banks.

What is a key difference between a compiled financial statement and an audited one?

• Audited statements do not involve test work.

• Compiled statements do not provide assurance.

• Audited statements are assembled by the client.

• Compiled statements provide assurance.

What is the primary task of an auditor in a compilation?

• To review the financial statements.

• To assemble financial statements for the client.

• To provide assurance on financial statements.

• To perform test work on financial data.

Which type of client might seek a compilation of financial statements?

• A client that requires audited financial statements.

• A client that struggles to prepare their own financial statements.

• A client with well-prepared financial statements.

• A client that needs a review of financial statements.

Why might some organizations not accept compiled financial statements?

• Because they are not assembled by auditors.

• Because they provide assurance.

• Because they are more expensive than audited statements.

• Because they do not provide assurance.

For what purpose might a client submit a compiled financial statement to a small local bank?

• To get an audit.

• To provide assurance.

• To review their financial statements.

• To seek a loan.