When a compilation client's records are incomplete
What ISRS 4410 (Revised) expects of a compiler whose client's records or explanations are incomplete or wrong, and when it must resign instead.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
A small company's owner drops off a box of bank statements, a spreadsheet of sales and a promise that "the rest is in the car". The firm has been engaged to compile the annual financial statements, not to audit them. Halfway through, it emerges that the spreadsheet leaves out an entire branch, the loan balance does not match the bank's letter, and the owner insists that a vehicle registered to the company is really his own.
A compiler is not an auditor and does not have to go hunting for problems. Once problems are in plain view, though, the compilation standard does not allow the compiler to look away. This article explains what ISRS 4410 (Revised) expects, and where the line falls between asking again and stepping away.
No duty to verify, but a duty to react
IFAC's article on ISRS 4410 (Revised) explains that in a compilation engagement the practitioner is not required to verify the completeness or accuracy of the information management provides, and stresses that a compilation is not an assurance engagement. Its discussion of ISRS 4410 as the standard for today's compilation engagements is a clear summary of what the standard does and does not ask of a compiler.
The same article explains the other side. Under ISRS 4410 (Revised), if the practitioner becomes aware that records, documents, explanations or other information, including significant judgements, are incomplete or inaccurate, the practitioner must request additional or corrected information from management. The trigger is awareness: what the compiler notices in the ordinary course of putting the statements together. A bank balance that does not agree to the statement, sales that look too low for the trade the compiler knows about, a loan the owner mentioned that is nowhere in the ledger.
Requesting additional or corrected information
A good request is specific, written and reasoned. It says:
- what appears to be missing or wrong;
- what the compiler needs to resolve it, whether a document, an explanation or a correction;
- by when, and what happens if it does not arrive.
For example: "The loan balance in the trial balance differs from the balance in the bank's year-end letter. Please send the bank's year-end loan statement, or explain the difference." Keep every request and every reply. If the matter later ends in resignation, that sequence is the evidence that the client was given a fair chance.
When management refuses
IFAC explains that under ISRS 4410 (Revised), if management does not provide the additional information or agree to the recommended changes, the practitioner would have to resign from the compilation engagement to avoid being associated with information known to be materially false or misleading.
Note where the threshold sits. Not every unanswered question leads to resignation. The trigger IFAC describes is association with information known to be materially false or misleading. Before reaching that point:
- Put the outstanding matters to management in one consolidated letter.
- Explain why each matters to the statements and what the firm recommends.
- Set a final date and explain plainly that, without a resolution, the firm will not be able to continue.
- Record the discussion and management's response.
The ethics behind the rule
The IESBA Code's five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. The IESBA describes integrity as being straightforward and honest in professional and business relationships, and professional behaviour as complying with laws and regulations and avoiding conduct that discredits the profession.
A practitioner whose name appears on compiled statements known to be misleading is neither straightforward nor protecting the profession's name, whatever the engagement letter says about responsibility. Confidentiality still applies after resignation: say no more to third parties than the law requires.
Requests, returns and reminders in Achekam
In Achekam, staff create, send and track requests to clients for documents, answers and confirmations in one RFI console, whichever screen the request was raised from. When the client responds, staff can accept or reject each item it sent and return the request saying what is still missing. Automatic reminders go every 3 days by default, up to 5 per request, and can be switched off; reusable request templates live under RFI Templates.
For a compilation with gaps, that structure is the record the firm needs. It shows what was asked, what came back, what was rejected and why, and how often the client was reminded. Build a template for the year-end compilation request so each client receives the same clear list, then return items rather than starting a fresh e-mail thread when something is incomplete.
Ending the appointment with a recorded reason
If resignation becomes necessary and the client keeps its books on Achekam with the firm appointed through client books, either the business or the firm can end that appointment. Achekam asks for a reason, keeps it on the record and shows it to the other side. When the appointment ends, the firm loses access to the books and the business keeps them.
Write that reason with care, because the client will read it: factual, brief and consistent with the letters already sent, for example that the firm could not complete the compilation because information it requested on specified matters was not provided. The wider steps, including fees, handover and any clearance request from a successor, are covered in disengaging from a client, and the standard as a whole in compilation engagements under ISRS 4410.
Most incomplete records are fixed by a clear request and a little persistence. The rule on resignation exists for the few that are not, and a file that shows each request, reminder and refusal is what lets the firm walk away with its reputation intact.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
