Presentation by Phil Cowperthwaite, IFAC SMP Committee member at the Malaysian Institute of Accountants, Auditing Micro-entitiesEfficiently and Effectively, March 23, 2012, Kuala Lumpur.

1. ISRS 4410 (Revised) –
Compilation Engagements
A standard for today‟s financial reporting needs
Kuala Lumpur March 23, 2012
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2. ISRS 4410 (revised)
• A flexible standard for the professional accountant in
public practice
• Adaptable to a wide variety of non-assurance
engagements
• Effective for compilation reports issued on or after
September 1, 2013
• Early adoption permitted
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3. Benefits to the engagement
What your client gains-
• Your expertise in accounting and financial reporting
tailored to their specific needs
• An objective view from a professional accountant
• A clear report outlining the nature of the engagement
What you gain from the engagement-
• Clearly communicated terms of engagement
• Flexibility to deliver a meaningful service
• A happy client 
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4. Why and when to use 4410
• 4410 (Revised) can be tailored to your engagements
• The prescribed report clearly describes:
– Management responsibilities
– Your value added and your responsibilities
– That no assurance is being given by you
• If stating compliance with 4410, you must issue a report
prescribed by 4410
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5. Flexibility in financial reporting
• The basis of accounting can be complex or simple
• It must be appropriate to the engagement
• The basis is always disclosed as part of the compiled
financial information
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6. Understanding your client
• You need sufficient understanding of:
– The entity‟s business and operations and
– The financial reporting framework
To be able to perform the compilation.
This may require a lot or a little depending on the
engagement
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7. Communicating with clients
Communication is required throughout the standard.
Specifically:
– In the engagement acceptance phase
– All significant matters during the engagement
– A report accompanying the compiled information
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8. Significant judgments
Management is responsible for the reported information
• Not required to second guess management judgments
• You must discuss significant judgments with management
where you have provided assistance
• Discussion must be sufficient to allow management to take
responsibility for the compiled information
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9. Ethical responsibilities
• Must comply with the IESBA Code
• No requirement for independence
• If you know compiled information to be materially
misstated or misleading, you must resign. No middle
ground.
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10. Summing it up
ISRS 4410 (Revised)
 New opportunities for professional accountants
 Flexibility permits good client service
 A focus on communication throughout
 Promotes consistent high quality practice
 Clients and accountants will benefit
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11. ISRS 4410 (Revised)
Try it.
You and your clients will benefit.
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12. REVIEW ENGAGEMENTS
AN ASSURANCE ALTERNATIVE
ISRE 2400
• Under revision now
• Completes the suite of standards for professional
accountants and their clients
– Reasonable assurance - audits - the ISAs
– Limited assurance - reviews - ISRE 2400
– No assurance – compilations – ISRS 4410
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13. 2400 – Basic concepts
Limited assurance – what is it?
• Risk of undetected misstatement greater than in an audit
• Assurance must be meaningful to users of the information
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14. A limited assurance engagement
• The report conclusion is evidenced based
• Specified procedures are required
• Professional judgment required throughout
• Ethics based (independence/competence/due care)
• Firms must be in compliance with ISQC1
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15. Challenges in Defining a middle ground
• How much evidence is enough to support the conclusion
“nothing has come to my attention…”?
• Needs a practitioner with up-to-date assurance skills
• A review is not „audit-lite‟. If statements cannot be
audited, they likely cannot be reviewed either
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16. The review process #1
Engagement acceptance
• Confirm management‟s responsibility
• Review management‟s integrity – critical for inquiry
• Are systems likely sufficient to produce data adequate for
meaningful analytical review?
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17. The review process #2
Develop an understanding of what?
1) The entity and its environment and
2) The reporting framework
Sufficient to do what?
To identify areas where material misstatements are likely to
arise
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18. The review process #3
Perform primarily inquiry and analysis on:
1) All material items and
2) Focus on areas where material misstatements likely to
arise
Inquiry to include questions on fraud and going concern
No prohibition on performing other procedures.
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19. How much evidence is needed?
• Sufficient to be able to conclude that nothing has come
to your attention that the statements are materially
misstated.
• This is not a „did nothing, saw nothing‟ conclusion. It is a
conclusion based on a significant understanding of the
entity and evidence gathering procedures by a
professional accountant skilled in assurance techniques.
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20. The review process #4
If you have cause to believe the statements may be
materially misstated, you must perform additional procedures
to:
1) Conclude „nothing has come to your attention…‟ or
2) Determine the statements are misstated and modify the
conclusion accordingly.
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21. Communication critical
Communication is emphasized throughout 2400:
• At the engagement acceptance phase
• At the planning phase with the client and staff
• Inquiry of management and others at every stage
• All significant matters identified in the engagement
• In the review report itself
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22. Summing it all up
• 2400 is a nuanced standard
• Part of the suite of standards covering services offered by
professional accountants to their client
• Result in a meaningful level of assurance to users at an
appropriate price
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23. Reviews and compilations
Thank you for your attention.
Any questions?
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