The Big 3 Accounting Services-Part One: Compilations

There are three major types of assurance services that accounting firms can offer churches and non-profit organizations: compilations, reviews and audits. The best type of engagement for your nonprofit depends on your need for the financial statements, expectations of third parties such as granting agencies or creditors, the volume of your financial activity or the complexity of the your organization itself. Each engagement requires a different amount of work by the accounting firm resulting in a difference in the fees charged. The more hours it takes, the higher the fee.



Compilations are the most basic engagements performed by a certified public accountant. The purpose of a compilation is to gather and report the organization’s financial data in a format accepted by generally accepted accounting principles (GAAP).


For a compilation, the accountant assists management in gathering and presenting financial information in GAAP compliant financial statements. Compilations should be conducted in accordance with the Statements on Standards for Accounting and Review Services adopted by the American Institute of Certified Public Accountants (AICPA). The CPA is required to have knowledge of the client’s industry and the applicable accounting principles associated with that company. This, in my opinion, is one of the key things to look for in deciding which accounting firm can best handle your needs. Always make sure you know exactly what the CPA will provide in a compilation. The professional requirements are low for compiled financial statements, but a CPA that knows your industry will know where to look for deficiencies within your internal data. Although the CPA is not “required” to do additional test work, if she knows a specific deficiency exists, she is obligated to investigate further the balances in the financial statements before signing the compilation opinion.

A compilation is not an assessment of financial performance. Its purpose is to compile an organization’s financial data into formal financial statements that can be reported out. The accountant does this without obtaining or providing any assurance regarding material modifications to the financial statements. The CPA will not address fraud risk, internal controls, performing inquiries or contemplate analytical procedures.

One additional thing that is very important. The CPA’s compilation report will include a “no assurance” statement. This means that the accountant assures the compilation was conducted in accordance with AICPA standards but was not conducted to report conformity with generally accepted accounting principles. The report will include a statement that the CPA has not reviewed or audited the financial statements.

Reviews and audits, the next more complex assurance services are much more forensic in nature. In Part Two of this series I’ll explain a review. Audits will be the subject of the third and final part. So, as you understand what each of these services can provide your organization, you can plan for the cost in your annual budget for the one that best meets your needs.

The certified public accounting firm of Cox and Associates CPAs has been serving churches and nonprofit organizations since 1996. Our goal is to achieve excellence in the provision of tax, accounting, auditing, financial education, consultation, and other related businesses services to our clients. Call us with your questions at (281) 399-8153.