avertissement

Nous avons récemment apporté quelques changements à la structure de notre site Web. Les adresses de certaines pages Web ayant été changées, vous pourriez donc tomber sur des liens brisés. Si vous rencontrez des problèmes pour accéder à une page, nous vous recommandons de naviguer à partir de notre menu principal revampé. Merci de votre compréhension.

CPAs and financial statements

What are the differences between compilation, review and audit engagements? What role does the CPA play? Here’s what you need to know to navigate the engagement landscape.

Most entities, whether corporations, NFPOs or government agencies, are legally required to present annual financial statements to their shareholders, members or the government, as the case may be. The law also requires certain entities to have their financial statements audited. In most cases, an entity’s management, with oversight from those charged with governance, is responsible for preparing financial statements. The scope of the CPA’s mandate depends on the entity’s needs and the requirements it must satisfy. 

Chartered professional accountants provide three levels of service with respect to communications (reporting) on financial statements—an audit, a review or a compilation. CPAs perform these services in accordance with their code of ethics and assurance standards established by the Canadian Auditing and Assurance Standards Board (AASB). Assurance standards (which include audit, review and compilation standards) are contained in the CPA Canada Handbook – Assurance.

The nature and extent of the work performed by CPAs has a direct impact on the level of assurance or credibility given to the financial statements and the cost of audit, review and compilation services. For each service, the CPA provides a different communication (i.e. “Independent auditor’s report,” “Independent practitioner's review engagement report,” or “Compilation engagement report”), which sets out the extent of work performed and the level of assurance expressed by the CPA.

Three levels of service

Les CPA et les états financiers

 

Audit engagement - Independent auditor’s report
Features of an audit engagement
Nature of involvement 
Application of Canadian generally accepted auditing standards  
Professional activity reserved for
Chartered Professional Accountants (CPAs) who hold a public accountancy permit 

Characteristics
An audit provides reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error. 

The key concept is “reasonable” assurance, which is not an absolute level of assurance. Absolute assurance is not attainable due to inherent audit limitations which result in most of the audit evidence on which the auditor draws conclusions and bases his or her opinion being persuasive rather than conclusive. 

Presentation standards 
Choice of several financial reporting frameworks included in Canadian generally accepted accounting principles (GAAP) 
Specific duties of CPAs under the Code of ethics (article 26)

Members shall not prepare, produce or sign any statement, letter, attestation, opinion, report, representation, financial statement, notice or other affirmation or document out of complacency or which he knows, or should know:

  1. contains false or misleading information;
  2. omits or dissimulates information, when the omission or dissimulation is likely to deceive; or
  3. contains information that does not comply with the applicable good practices, laws, or standards.
Level of assurance 
Provides the highest level of assurance (reasonable assurance) 
Communication provided with respect to the financial statements1 

Independent auditor’s report

[Appropriate Addressee]

Opinion 

We have audited the financial statements of (COMPANY NAME) (the “Entity”), which comprise the balance sheet as at (DATE), and the statements of income, retained earnings and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at (DATE), and the results of its operations and its cash flows for the year then ended in accordance with (APPLICABLE FINANCIAL REPORTING FRAMEWORK. 

Basis for Opinion 

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with (APPLICABLE FINANCIAL REPORTING FRAMEWORK), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 
  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. 
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 
  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. 
  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Appropriate signature of auditor

Date of the auditor's report

Auditor's address 

Review engagement - Independent practitioner’s review engagement report
Features of a review engagement
Nature of involvement 
Application of Canadian generally accepted standards for review engagements (CSRE 2400)
Professional activity reserved for
Chartered Professional Accountants (CPAs) who hold a public accountancy permit or public accountancy permit limited to review engagements

Characteristics
A review consists primarily of inquiry, analytical procedures and discussion related to information supplied to the CPA by the client. 

The CPA’s objective is to determine whether the information being reported on is plausible in the circumstances within the framework of appropriate criteria. “Plausible” is used in the sense of appearing to be worthy of belief.

A review does not require the CPA to seek supporting or independent evidence or to study and evaluate internal control.

Presentation standards 
Choice of several financial reporting frameworks included in Canadian GAAP 
Specific duties of CPAs under the Code of ethics (article 26)

Members shall not prepare, produce or sign any statement, letter, attestation, opinion, report, representation, financial statement, notice or other affirmation or document out of complacency or which he knows, or should know:

  1. contains false or misleading information;
  2. omits or dissimulates information, when the omission or dissimulation is likely to deceive; or
  3. contains information that does not comply with the applicable good practices, laws, or standards.
Level of assurance 
Provides a limited level of assurance 
Communication provided with respect to the financial statements1

Independent practitioner's review engagement report 

[Appropriate addressee]

We have reviewed the accompanying financial statements of (COMPANY NAME) that comprise the balance sheet as at (DATE), and the statements of income, retained earnings and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with (APPLICABLE FINANCIAL REPORTING FRAMEWORK), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Practitioner's Responsibility

Our responsibility is to express a conclusion on the accompanying financial statements based on our review. We conducted our review in accordance with Canadian generally accepted standards for review engagements, which require us to comply with relevant ethical requirements.

A review of financial statements in accordance with Canadian generally accepted standards for review engagements is a limited assurance engagement. The practitioner performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained.

The procedures performed in a review are substantially less in extent than, and vary in nature from, those performed in an audit conducted in accordance with Canadian generally accepted auditing standards. Accordingly, we do not express an audit opinion on these financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial statements do not present fairly, in all material respects, the financial position of (COMPANY NAME) as at (DATE), and the results of its operations and its cash flows for the year then ended in accordance with (APPLICABLE FINANCIAL REPORTING FRAMEWORK).

Appropriate signature of practitioner

Date of the practitioner's report

Practitioner's address

Compilation engagement - Compilation engagement report
Features of a compilation engagement
Nature of involvement 
Application of Canadian compilation standards 
Professional activity reserved for
Chartered Professional Accountants (CPAs) 

Characteristics
Compilation consists in compiling an entity’s financial statements based on information available without providing any assurance whatsoever regarding such statements.

The CPA receives information from a client and arranges it in the form of a financial statement. The CPA is concerned that the assembly of information is arithmetically correct.

Some clients and other users do not need financial statements containing all disclosures normally required in financial statements that comply with a financial reporting framework included in Canadian GAAP, nor do they need the assurance that can be provided by a CPA who performs an audit or a review. Normally, such clients and users would have, or be able to obtain, further information.

Presentation standards 
Financial reporting framework chosen by management 

Specific duties of CPAs under the Code of ethics (article 26)
Members shall not prepare, produce or sign any statement, letter, attestation, opinion, report, representation, financial statement, notice or other affirmation or document out of complacency or which he knows, or should know:

  1. contains false or misleading information;
  2. omits or dissimulates information, when the omission or dissimulation is likely to deceive; or
  3. contains information that does not comply with the applicable good practices, laws, or standards.
Level of assurance 
Provides no assurance 
Communication provided with respect to the financial statements1

Note: The compilation Engagement report replaces the Notice to reader for compiled financial information for fiscal periods ending on or after December 14, 2021.  (with early application permitted).

Compilation Engagement Report 

On the basis of information provided by management (or the proprietor), I have compiled the balance sheet of (COMPANY NAME) as at (DATE), the statements of income and retained earnings for the year then ended, and Note X, which describes the basis of accounting applied in the preparation of the compiled financial information [and, if applicable, other explanatory information] ("financial information").

Management is responsible for the accompanying financial information, including the accuracy and completeness of the underlying information used to compile it and the selection of the basis of accounting.

We performed this engagement in accordance with Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements, which requires us to comply with relevant ethical requirements. Our responsibility is to assist management in the preparation of the financial information.

We did not perform an audit engagement or a review engagement, nor were we required to perform procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an audit opinion or a review conclusion, or provide any form of assurance on the financial information.

Readers are cautioned that the financial information may not be appropriate for their purposes.

Appropriate signature of practitioner

Date of the practitioner's report

Practitioner's address 

1. Note that this report may vary depending on the circumstances. For more detailed information on the reports, you can read the article of CPA Canada Understanding reports on financial statements.

 

1.0.0.0