Compiled financial statements are prepared by a CPA from management-provided data, with no verification, testing, or assurance. The lowest level of CPA involvement — the CPA reports that no audit or review was performed.
A compilation engagement is the most basic level of CPA financial statement service. The accountant helps management present its financial information in statement form (conforming to GAAP or another applicable framework) and issues a report that explicitly states no audit or review was performed and no opinion or assurance is expressed. The CPA performing a compilation does no independent testing: no account confirmations, no analysis of unusual items, no management inquiries (beyond those needed to understand the business). They compile — organize and present — the data management provides. If the CPA becomes aware of obvious errors or violations, they raise them with management, but the engagement itself doesn't require searching for them. Compilation costs are low: typically $1,000–$5,000 for a simple small business. Turnaround can be days to weeks. For businesses with straightforward financials and an ongoing CPA relationship, compiled statements are routine. For lending, compiled statements are accepted by: non-bank lenders, equipment lenders, factors, invoice financers, and for smaller loan amounts at bank lenders. Many SBA Express loans and smaller SBA 7(a) applications ($350K and under) are evaluated primarily on tax returns rather than CPA statements — compiled financials supplement but don't replace tax returns for underwriting.
For smaller SBA loans (under $350K, including SBA Express), lenders primarily rely on tax returns and bank statements. Compiled financial statements may supplement but aren't always the primary documentation. For larger SBA 7(a) loans, lenders typically want reviewed or audited statements. SBA SOP 50 10 governs specific documentation requirements by loan size and type.
Compiled statements provide professionally formatted financials that present the information clearly per accounting standards. The CPA's name on the report provides some credibility (they would resign if management were asking them to compile obviously fraudulent numbers). For lenders, compiled statements are preferable to owner-prepared statements — they signal some level of professional involvement.
No requirement exists unless a lender, investor, or contractual obligation mandates it. Many small businesses operate with owner-prepared or bookkeeper-prepared financials year-round and only engage a CPA for tax returns. For loan applications, the type of statements required depends on the loan size and lender type — many non-bank lenders accept bank statements + tax returns without any CPA-prepared statements.