In a compilation engagement, what is the accountant required to do?

In a compilation engagement, the accountant is required to obtain a general knowledge of the business and operations of the entity. This is crucial because the purpose of a compilation is to assist management in presenting financial information in the form of financial statements without providing any assurance that the statements are free of material misstatements.

By understanding the business and its operations, the accountant can compile the financial statements in a manner that is relevant and useful to the intended users. This knowledge helps in ensuring that the financial data compiled reflects the entity’s financial position accurately, even though the engagement does not involve detailed verification or audits of the underlying transactions.

Compilations are different from audits or reviews; they do not provide an opinion or assurance regarding the financial statements, hence the focus is on the knowledge of the business rather than conducting extensive analyses or testing, which would be required in other types of engagements.