The frequently asked questions noted below are in addition to the questions addressed in the CPA Canada CSRS 4200 implementation tool and the CPABC PD course on application of the new CSRS 4200.
Should you not be able to find an answer to your question in the implementation tool, CSRS 4200 course materials, or in the FAQs below please contact CPABC Professional Advisory.
- If I am engaged to provide bookkeeping services and use bookkeeping software, can I provide to the client the software generated income statement, balance sheet, trial balance, and general ledger that I usually provide?
Yes, you are still able to provide your clients with this information as bookkeeping services are excluded from the scope of CSRS 4200. Keep in mind that since you are not performing a compilation engagement you are unable to issue a communication on these financial statements, and you will want to ensure the firm’s name is not on the statements.
- Do I need to contact the third party to ensure the one of the two requirements in CSRS4200.25(c) are met?
No, you need to seek acknowledgement from management only that the third party is in a position to obtain further information from the entity; or has agreed with management the basis of accounting to be applied in the preparation of the compiled financial information.
- Can I send information to a third party when I only performed a bookkeeping or T2 engagement?
It is generally advised not to send anything directly to a third party, but rather have your client send it directly so that your role in the engagement is clear.
CPA Canada discusses third party request in their blog post “New Standard on Compilation Engagements: What Does it Mean for Tax work?”
- Are we required to have two separate engagement letters when providing bookkeeping services and are preparing the T2?
A written agreement such as an engagement letter documents the terms of the engagement and helps avoid misunderstanding on the respective responsibilities of you and management, the scope of the engagement, and the form and content of the report to be issued. It is important that the engagement letter is tailored to the particular engagement or engagements. It is recommended that you review the engagement letter with management so that they have a clear understanding of the engagement and of their responsibilities. Of course, management must sign and date the engagement letter to acknowledge their understanding, and you may document any related discussion. Whether you include terms related to several engagements in one or more letters is up to the practitioner’s judgment. In addition, it is advisable to discuss the contents of your engagement letters with your legal counsel to ensure that they serve their intended purpose.
- Can CPABC review our engagement letters?
Engagement letters play a vital role in protecting your firm. Best practice dictates that engagement letters should be carefully tailored for your firm and to the particular engagement, reviewed by your legal counsel, and discussed with management. Due to the highly personalized nature of engagement letter contents CPABC cannot provide advice on practitioners’ engagement letters.
- When deciding to accept the engagement, if there are no third party users requiring a compilation engagement report, am I still able to execute a compilation engagement?
You are still able to apply CSRS 4200 if there is no third party user requiring a compilation engagement. There may be many reasons why a practitioner will choose to apply CSRS 4200. This is addressed in the standard under Paragraph 3 and A5:
CSRS 4200.3: In the circumstances described in paragraph 2, the practitioner may decide, or be requested, to issue a communication on such financial information. In that case, the only appropriate form of communication is a compilation engagement report and all the requirements of this CSRS apply. (Ref: Para. A5)
Deciding to Apply this CSRS When Not Required (Ref: Para. 3)
CSRS4200.A5: Notwithstanding that this CSRS does not apply in the circumstances described in paragraph 2, the practitioner may decide to perform a compilation engagement. This may be the case when, in the practitioner's judgment, a compilation engagement report is necessary to avoid misunderstanding by users as to the nature and limitations of the engagement, and the practitioner's and management's responsibilities.
- Can I put my firm letterhead on all pages of the financial statements issued under CSRS 4200?
Firm information or branding should only be on the compilation report. The reason being is that the financial information is from management where the compilation report is from the practitioner. For this reason, the only page with practitioner information or branding should be the compilation report.
- What resources are available for firms that are implementing the new standard?
The full standard can be found in the CPA Handbook, which is available on Knotia and is included in the CPA membership fees for all members. The standard includes a sample engagement letter and sample compilation engagement report. CPABC has prepared the KBase Collection – CSRS 4200 which contains various resources related to the standard. CPA Canada includes various CSRS 4200 templates in their PACT (Practice Management, Advisory, Compilations and Tax guide) and PEG (Professional Engagement Guide) subscriptions.