Changes to your financial statements. Clarifying the new CSRS 4200, Compilation Engagements

With the new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements in effect for periods ending on or after Dec. 14, 2021, we answer some common questions below to help you effectively navigate the change.

Is the new standard an addition to or a replacement of the current standard?

CSRS 4200, Compilation Engagements, replaces the old Notice to Reader (NTR) standard in its entirety.

Why is the new standard needed?

The NTR standard had not been significantly revised in over 30 years and was in need of a change to address the following issues:

• The reality that the financial statements are often used by third parties, such as lenders.
• A gap between lenders' perception of the extent of work performed and what was actually required.
• A lack of clarity as to the basis of accounting applied.
• Variation in the extent of work done by practitioners and the level of documentation in a compilation file.

The new compilation engagement report provides more clarity about the nature and scope of the engagement, as well as management and practitioner responsibilities. The new note describing the basis of accounting will help users understand how the financial information was put together.