Compilation Report: Required Elements, Example, and What It Does Not Say

A compilation report is the short letter a CPA attaches to financial statements they assembled from a client's own records, stating plainly that they did not audit or review the statements and express no opinion, no conclusion and no assurance on them. It is required on every compilation engagement under AICPA standard AR-C 80. The report is the thing that separates a compilation from a set of statements you printed yourself: it names the accountant, names the standard, and names exactly how little responsibility the accountant is taking for the numbers.

Owners usually meet the report because a bank, a bonding agent, a franchisor or a buyer asked for "CPA-prepared statements" and the cheapest way to satisfy that request is a compilation rather than a review or an audit. Below is what the report must contain, an illustrative example of the wording, the two variations that trip firms up, and how the statements behind it get built.

What is a compilation report?

A compilation report is a written communication in which an accountant reports on financial statements they compiled, without providing assurance. Under AR-C 80 the accountant assembles the client's numbers into proper financial statement format and reads them for anything obviously wrong, but performs no verification, no analytical procedures and no inquiries. The report says exactly that, so a lender or reader knows the accountant did not test the underlying records.

The key phrase in the profession is "nonassurance." A compilation is an attest service, but it is a nonassurance service: the accountant is not gathering evidence to support an opinion. That is why the report cannot be read as a clean bill of health. It is a statement that a professional put the numbers into shape and is telling you, in writing, the limits of what they did.

What are the required elements of a compilation report?

AR-C 80 lists the elements a compilation report must contain. The report is short, usually a single paragraph, but every one of these has to be present or the report is defective. They are the same whether the statements are one page or forty.

Required elements of an AR-C 80 compilation report

Element	What it states
Management responsibility	That management (or the owners) is responsible for the financial statements
Identification	The entity, the financial statements compiled, and the date or period they cover
Standard	That the compilation was performed in accordance with SSARS
Scope disclaimer	That the accountant did not audit or review the statements and does not express an opinion, a conclusion, nor provide any assurance on them
Signature	The manual or printed signature of the accountant or the firm
Location	The city and state where the accountant practices
Date	The report date, which is the date the accountant completed the compilation procedures

Notice what is not on that list: no opinion, no assurance language, no description of procedures performed, no statement about internal controls. The report is deliberately thin, because the whole point is to communicate that the accountant did not do the work an audit or a review would require.

What does a compilation report look like?

Here is an illustrative example of the core wording. Actual reports vary with the firm's template and the reporting framework, so treat this as a shape, not a form to copy. The accountant's signature, city and state, and the report date follow the paragraph.

"Management is responsible for the accompanying financial statements of XYZ Company, which comprise the balance sheet as of December 31, 2025, and the related statements of income, changes in equity, and cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. I (we) have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. I (we) did not audit or review the financial statements nor was (were) I (we) required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, I (we) do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements."

That paragraph, plus a signature, a city and state, and a date, is a complete compilation report in the ordinary case. The two situations below change it.

Does a compilation require independence?

No. An accountant is not required to be independent to perform a compilation, which is what makes it available to the firm that also does the client's bookkeeping. But if the accountant is not independent, that lack of independence must be disclosed in the report, usually in a final sentence such as "I am (We are) not independent with respect to XYZ Company." The accountant may state the reasons for the lack of independence, but is not required to; if they choose to give reasons, they must include all of them.

This one rule is the most commonly missed on the entire engagement, and it is missed precisely by the firms most exposed to it: the ones providing bookkeeping, payroll or controller services to the same client whose statements they are compiling. Doing the books destroys independence. The fix is not to stop, it is to disclose. A review or an audit, by contrast, cannot be performed at all without independence.

Can a compilation omit disclosures and note disclosures?

Yes. Management may elect to omit substantially all of the disclosures (the footnotes) ordinarily included in financial statements, and small companies frequently do because a lender does not need them. When disclosures are omitted, the compilation report must say so, with a paragraph stating that management has elected to omit substantially all the disclosures required by the applicable financial reporting framework, and that if the omitted disclosures were included they might influence the user's conclusions. The statements themselves may also be labeled to signal the omission.

The omission has to be for a purpose that is not misleading. Dropping the footnotes to save fees on a bank compilation is fine; dropping a specific disclosure to hide a problem is not, and the accountant is expected to catch that when reading the statements. The distinction between a compilation, a preparation and a review sits in compilation vs review vs audit, which walks the assurance ladder in full.

How are the statements behind the report built?

The report is the last inch of the work. Everything before it is assembling the statements: starting from a trial balance the client has closed, mapping every account to a statement line, building the income statement first because net income feeds equity, rolling that into the balance sheet, and deriving the cash flow statement from the movement between the opening and closing balance sheets. The order is fixed, and the order financial statements are prepared in explains why each step depends on the one before it.

That assembly is mechanical and repetitive, which is why it is worth automating for a firm running thirty or eighty compilation clients. Financial statement compilation software reads whatever the client's books export, maps the chart of accounts, produces the three statements already footed and tied to each other, and hands back a finished draft for the accountant to read and report on. The mapping persists between periods, so the second month on a client takes a fraction of the first. The judgment, the reading for problems and the report stay with the CPA, where the standard puts them.

Compiled statements are also the starting point when a small business changes hands: a buyer valuing the business works from exactly this level of financial statement before anything more expensive is commissioned, and a clean compilation is often enough to support an early business valuation. Getting the statements assembled quickly and correctly is what keeps a fixed-fee compilation profitable, and it is the part that scales worst by hand.

If your firm's constraint is throughput in the first two weeks of the month rather than skill, the multi-client review flow on our software for accounting firms page is built for exactly that. AIStatements formats and analyzes the data you provide; it is not a CPA, it does not issue your report, and it does not guarantee GAAP compliance.