Compilation or review engagement?
Updated
Owners usually meet this question because a lender, investor or franchisor asked for “reviewed statements” without saying why. The difference is not quality or thoroughness but how much the accountant is willing to say about the numbers.
If a lender has asked for something specific and you are not sure which of the two it is, an email enquiry will settle it faster than reading further.
Where we work
The fee is the same wherever you are. The same engagement serves Abbotsford businesses, the Chilliwack valley, Langley and Mission, everywhere in the Fraser Valley, and reaches the Lower Mainland.
Short answer: A compilation puts your figures into financial statement format and says explicitly that no assurance is being provided. A review adds procedures — enquiry and analysis, and produces limited assurance: nothing came to the accountant’s attention suggesting the statements are materially misstated. Review costs more because more work is done. Which one you need is almost always decided by whoever is asking for them.
| Compilation | Review engagement | |
|---|---|---|
| Assurance provided | None, stated explicitly | Limited assurance |
| What the accountant does | Puts your information into statement format | Enquiry and analytical procedures |
| Form of the conclusion | A communication that no assurance is given | Nothing came to our attention… |
| Independence required | No | Yes |
| Intended readers | Restricted — readers who can obtain more information | Not restricted in the same way |
| Typical requester | Smaller lenders; internal use | Larger lenders, outside shareholders, covenants |
| Your time involved | Mostly assembling documents | Documents plus answering enquiries |
| Relative cost | Lower | Higher — more work is performed |
| Required by the CRA | No | No |
On this page
What a compilation is, and what it is not
In a compilation, the accountant puts your information into financial statement form. The work is real — figures consistent, statements properly prepared — but the underlying information is not verified.
The standard requires a clear communication with the statements stating that no assurance is provided. That is not a buried disclaimer; it defines the engagement, and any reader may rely on it meaning exactly what it says.
Compilations also carry a restriction on who they are intended for, which matters in practice: a compilation is prepared for people who can obtain further information about the business, not for general distribution to anyone who asks.
What a review engagement adds
A review is an assurance engagement. The accountant performs procedures — principally enquiry of management and analytical work — designed to give a basis for a conclusion about the statements as a whole.
The conclusion is negative: nothing has come to the accountant’s attention suggesting the statements are not prepared, in all material respects, in accordance with the applicable framework. That is limited assurance: more than nothing, less than an audit.
A review also requires the accountant to be independent, which a compilation does not. Where independence is the reason a third party is asking, a compilation cannot satisfy the request no matter how well prepared it is.
Why an accountant may decline to compile
A compilation is not simply “whatever the client says”. Where the accountant becomes aware that the information is misleading, they cannot put their name to it, and the engagement stops.
In practice this is the point at which a compilation turns into a conversation about the bookkeeping. Statements cannot be compiled from records that do not reconcile, and time spent fixing that is often the larger part of the cost.
This is why the cheapest route to statements of any kind is books that are current and reconciled through the year. It shortens every engagement type, and it is the one variable genuinely within the owner’s control.
Who asks for which, and why
Lenders are the most common source of the request. A modest facility is frequently satisfied by a compilation; larger or riskier lending, or a covenant that has to be measured, tends to attract a review requirement.
Outside shareholders who are not involved in running the business often want a review, because the point of the exercise is precisely that someone independent has looked.
Franchisors, landlords, bonding companies and grant programs each have their own thresholds, and they are usually written down. It is worth asking for the requirement in writing before commissioning anything.
The CRA does not require either. A corporate return is filed from the financial information regardless of engagement type, so nothing here is driven by tax filing.
The question to ask before you commission either
Ask whoever requests the statements what level of assurance they need, and get it in writing. People use “reviewed” and “prepared by an accountant” loosely, and the difference costs real money.
It is worth asking a second question too: whether the requirement is fixed or negotiable. Requirements are sometimes set by policy that predates the current relationship, and a lender comfortable with a business will occasionally accept a compilation where the paperwork says review.
Commissioning a review nobody asked for is the most common way to overpay here. Commissioning a compilation where a review was required is the most common way to have to pay twice.
What each engagement costs you in effort
A compilation asks for your records and a set of answers. Most of the burden is assembling documents, and a business with reconciled books can move through it quickly.
A review takes more of your time: questions only someone who knows the business can answer, and follow-ups where figures move unexpectedly. That is the work, not a sign of a problem.
Neither is an audit, which involves testing and external confirmation and is a different order of cost and disruption again. Where an audit is genuinely required, that will have been stated explicitly. It is not something to infer.
Questions people ask
Does the CRA require reviewed statements?
No. The CRA requires neither a compilation nor a review. A corporate return is filed from the financial information regardless of engagement type, so this decision is driven by lenders, shareholders or other third parties rather than by tax filing.
What does "limited assurance" actually mean?
That the accountant performed enquiry and analytical procedures and nothing came to their attention causing them to believe the statements are materially misstated. It is expressed negatively by design — more than no assurance, less than the positive opinion an audit provides.
Can I give compiled statements to my bank?
Often yes, for smaller facilities. But a compilation is intended for readers who can obtain further information about the business, and it says plainly that no assurance is provided. Ask the lender what they require before commissioning anything.
Why does a review cost more?
Because more work is performed. Enquiry and analytical procedures take time, generate follow-up questions, and require the accountant to be independent. The fee difference reflects the additional work rather than a difference in care.
Can my accountant refuse to compile my statements?
Yes. Where the accountant becomes aware the information is misleading they cannot put their name to it. More commonly the engagement stalls because records do not reconcile — statements cannot be compiled from books that do not add up.
How do I keep the cost down either way?
Keep the books current and reconciled through the year. Time spent fixing records is usually the larger part of any engagement fee, and it is the one variable genuinely within your control.
General information, not tax advice. This compares two operating models in general terms and cannot account for your circumstances. Speak to a CPA before acting — send an enquiry.