What is the difference between a compilation report and an auditor's report?

Short answer

Compilation supports preparation without providing assurance. An auditor's report follows from examination and gives reasonable assurance about the annual accounts.

Basis: art. 2:393 DCC

What does an accountant do when compiling?

In a compilation engagement, the accountant organises and processes the data you supply into annual accounts. No audit is performed; the report therefore expressly contains no opinion.

When compiling, the accountant uses the bookkeeping supplied and discusses unclear points with the client. He may ask, for example, why receivables rose by €40,000 while turnover stayed the same. That is something different from independently gathering sufficient audit evidence about the correctness of all material items. The compilation report names the engagement performed and the absence of an audit opinion. The board remains responsible for the content and for supplying complete information. A nicely designed report does not change the nature of the engagement.

What assurance does a statutory audit give?

In a statutory audit, the accountant examines whether the annual accounts give the required view. That leads to an opinion: unqualified, qualified, adverse or a disclaimer of opinion.

In an audit, the accountant examines whether the annual accounts as a whole give the required view within a certain materiality. For that purpose external confirmations, contracts and internal controls, among other things, may be assessed. The report gives a reasonable degree of assurance, not an absolute guarantee that every error has been found. A turnover item of €2 million, for example, calls for different work than a small cash item; the approach is risk-based. The statutory requirement of art. 2:393 DCC depends on the size class and possible exceptions. Ask the accountant at what stage the auditor's report will be available, so that filing does not stall.

Which report does your financier really ask for?

For micro and small entities a statutory audit is in principle not required; a compilation report is not generally required by law either. Financiers may ask for a specific type of engagement, so agree the required assurance beforehand.

A bank may write 'annual accounts with accountant's report' in the agreement without naming the type precisely. Have that clarified before you sign an engagement. Ask explicitly whether a compilation report suffices, or whether a review or audit is required. Also check which entity and which financial year the requirement concerns. For a holding company with an operating company, a report on the holding company alone may be insufficient for the financier. Record the agreement in writing and supply the necessary bookkeeping in time. That prevents a second engagement with different work just before the deadline.

How do you read the text of the report?

First look at the title and the description of the engagement performed. For a compilation, the accountant can explain what information the board provided and that no assurance is given. An auditor's report contains the opinion, its basis and sometimes separate emphasis points. A report bearing the logo of an accounting firm is not in itself proof of an audit. Suppose a bank grants €500,000 of credit and explicitly requires audited annual accounts: a compilation report on the same figures does not meet that contractual condition without the bank's consent.

Then read which annual accounts the report relates to. Are the financial year 2025, the right BV and the full consolidated group named? A report on the holding company's stand-alone figures does not automatically say anything about a subsidiary. Also look at whether the opinion is qualified or a disclaimer was given; that has a different meaning from an unqualified opinion. Ask the accountant about the consequences of reservations for publication and discuss them with the financiers concerned. Keep the report with exactly the version of the annual accounts it relates to, so that pages from different drafts are not combined later.

Sources

• KVK: accountant's audit per class
• KVK: content and audit per size class

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