Lesson: Compilation Engagements

In this lesson, Nick Palazzolo covers compilation engagements, and how they are different from preparation and review engagements. The focus of a compilation engagement is to apply accounting and financial reporting expertise to assist management in the presentation of financial statements without obtaining any assurance that there are no material modifications. The lesson discusses the importance of establishing an understanding with management to help clarify the objectives, responsibilities, and limitations of the engagement. The lesson also highlights the key aspects to include in an understanding, such as management's responsibility for fraud and compliance with laws and regulations, and the accountant's responsibility to conduct the engagement in accordance with SARS. Additionally, the lesson emphasizes that compilations do not offer any level of assurance and cannot be relied upon for detecting errors, fraud, or illegal acts.