For compiled financial statements

An APES 315 compilation engagement letter for Australian firms

A compilation is the one engagement where the standard tells you what the letter must say. Most of the work of writing it is not leaving anything out.

A compilation engagement letter records the terms on which an accountant puts financial statements together from what management provides, without auditing or reviewing them. In this edition the terms follow APES 315: the intended use of the statements, the basis of accounting, your responsibilities and management's, and the form of the report. The template below covers each one, free in Word and PDF.

Last reviewed 25 September 2026 against 2 primary sources.

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Compilation engagement letter

The full letter in Word and PDF, written for Australia against APES 315.

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Bookkeeping and tax letters are drafted from experience. A compilation letter is drafted from APES 315: APES 315 requires the terms to be documented and communicated under APES 305, in writing, and a written acknowledgement from the client of its responsibilities. The standard lists what the terms must cover, and a practice inspection will look for each item.

The substance behind the list is simple. You put financial statements together from what management gives you; you do not audit or review them; management owns them, the numbers and the basis of accounting; and the report you attach says exactly that. The letter is where management agrees to it before you begin.

What the standard requires the letter to cover

Paraphrased, not quoted. Check the current text of APES 315 before relying on the wording.

1

The intended use of the statements

Who will read them and why — the owners, a lender, a tax return. The intended use decides whether the basis of accounting is acceptable, so it comes first.
2

The basis of accounting

Name it. Common choices are Australian Accounting Standards (Simplified Disclosures under AASB 1060, as a minimum, where the law requires them), or special purpose financial statements where it does not. Management selects it and acknowledges that it is acceptable for the intended use.
3

Your objective and your responsibilities

To apply accounting expertise to compile the statements from management's information, in compliance with the relevant ethical requirements — and not to audit or review them or obtain assurance of any kind.
4

Management's responsibilities

For the financial statements themselves, for the accuracy and completeness of the records and information provided, and for the judgments needed to prepare them, including the ones you help with.
5

The form of the report

The Compilation Report, what it will say, and that it goes with the statements whenever they are distributed. The standard expects the letter to describe the report before it exists.

The compilation engagement letter

Written for Australia. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

[Management / The Directors], [Entity name]
[Address]

Dear [Client contact],

Purpose and intended use

This letter sets out the terms on which we will compile the financial statements of [Entity name] for the period ending [date]. You have told us the statements are intended for use by [management / the owners / name of third party] for the purpose of [purpose].

Our responsibilities

We will compile the financial statements from the records, documents, explanations and other information you provide, in accordance with APES 315 and the ethical requirements that apply to us. A compilation is not an audit or a review. We will not verify the accuracy or completeness of the information you give us, and we will not express an opinion or a conclusion, or provide any assurance, on the financial statements.

Our work cannot be relied on to detect errors, fraud or illegal acts. If we become aware that the information is incomplete, inaccurate or otherwise unsatisfactory, we will ask you for further information, and if it is not provided we may withdraw from the engagement.

Your responsibilities

You are responsible for the financial statements; for selecting a basis of accounting that is acceptable for their intended use, which you have agreed will be [basis of accounting]; for the accuracy and completeness of the records, documents, explanations and other information you provide; for the judgments needed to prepare the statements, including those we assist with; and for giving us access to all the information we need.

Where the statements are to be given to a third party, you acknowledge that the third party is able to obtain further information from you, or has agreed the basis of accounting with you.

Our report

We will issue a Compilation Report, which will state that we compiled the statements from information you provided, that you are responsible for them, and that we did not audit or review them or provide any assurance. You agree to include our report whenever the statements, or any document that says we compiled them, are distributed. The report may differ in form from this description if our findings require it.

Fees

Our fee is [amount] in Australian dollars, invoiced [when], payable within [number] days. Work outside this scope is charged at [rate] per hour and agreed with you first.

Confidentiality and your information

We keep your information confidential, hold it in accordance with the Privacy Act 1988, and retain our working papers for [number] years.

Agreement

Please sign and date a copy of this letter to confirm that these terms are agreed.

Yours sincerely,
[Name], [Firm name]

Acknowledged and agreed on behalf of [Entity name] by [Name, Title]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

What APES 315 asks of an Australian compilation letter

APES 315 Compilation of Financial Information, revised for engagements from 1 April 2023, adds its own list to the APES 305 contents: no audit or review and no assurance, no reliance for finding fraud or error, the information the client supplies, the basis of accounting, and any limits on use and distribution.

Where general purpose financial statements are compiled, the letter should say they must follow Australian Accounting Standards, and APES 205 applies to the work. For prospective information, it should cover the basis of the forecast and the client's key assumptions.

When a report must issue

A Compilation Report is required where your name is identified with the information, where users may misunderstand your involvement, or where the information must be publicly filed. The letter should say which applies.

Internal use only

For information compiled solely for the client's internal use, APES 315 expects an Accountant's Report Disclaimer and a legend on every page restricting it to internal use. Agree that restriction in the letter so it holds later.

Judgements you help with

Where you assist with significant judgements on amounts or disclosures, you must discuss them with the client, and with those charged with governance, so that they accept responsibility for them. Name that step in the letter.

Outsourcing changes nothing

If part of a compilation is outsourced, APES 315 says your obligations stay exactly as if your own staff did the work. Tell the client who is involved, as APES 305 requires, and review the work before the report issues.

Where compilation engagements go wrong

A lender reads it as assurance

The statements go to a bank without the report, or with it and nobody reads it. The letter's intended-use clause and the promise to attach the report are what protect you.

The basis nobody chose

The statements are prepared on a tax basis because they always have been. The standard wants management to select and acknowledge the basis, in writing, for this year's use.

A letter that predates the standard

A compilation letter written for a superseded standard misses items the current one requires. It is the first thing a practice inspection checks.

Other engagement letters

Accounting Accounting Audit Audit Bookkeeping Bookkeeping

Questions about compilation engagement letters

Is an engagement letter required for a compilation?

APES 315 requires the terms to be documented and communicated under APES 305, in writing, and a written acknowledgement from the client of its responsibilities.

Does the accountant have to be independent?

APES 315 does not require independence, but a member who is not independent must say so in the Compilation Report.

Can the compilation share a letter with the tax return?

It can, provided the compilation has its own clearly separate section covering everything the standard requires. Many firms find two letters clearer, because the two engagements are governed differently.

How often should the letter be renewed?

Each year is the safe answer, and whenever the intended use, the basis of accounting or the users change. A letter that describes last year's purpose is weak evidence of what management agreed for this one.

Sources

The primary sources this page is written against, last read against it on 25 September 2026. Check them before relying on a detail; rules and thresholds change.

APESB APES 305
APESB APES 315 (March 2023) effective 1 April 2023

What changed

17 October 2026 Added an editable Word (.docx) copy of the letter beside the PDF.
25 September 2026 Added the section on what Australian law adds, written from primary sources, and reviewed the shared letter text for wording that only US law supports.

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