What Are Compilation Engagements, and Why More SMEs Are Choosing Them in 2025

Not every SME in South Africa is required to undergo an audit. In fact, many growing businesses are discovering that a compilation engagement offers the ideal balance between professional financial reporting and cost-efficiency, especially when there’s no statutory or funding requirement for assurance.

A compilation engagement involves the preparation of financial statements by an accounting professional, using information provided by management. Unlike an audit or review, a compilation provides no assurance, meaning the accountant does not verify the accuracy of the data, but it still results in a clean, structured set of financials that align with applicable frameworks like IFRS for SMEs.

For many SMEs, the biggest draw is simplicity and affordability. A properly prepared compilation allows business owners to present financials to banks, funders, and other stakeholders without going through the time and cost of an audit. It also ensures compliance with the Companies Act and other regulatory requirements where an audit is not mandatory.

One common misconception is that compilation engagements are the same as exporting financial reports from accounting software. In reality, a compilation involves more than just formatting, it includes adjustments, professional presentation, and ensuring the correct disclosures are included. It also provides a compilation report, which outlines the scope of the accountant’s involvement and adds credibility to the financials.

At RRG Advisory, we assist SMEs by preparing compliant, investor-ready financial statements with a clear compilation report. We liaise with your in-house accountant or bookkeeper, perform basic validations, and ensure that your statements are aligned with the right reporting standards. If we pick up errors or weaknesses along the way, we flag them so you can resolve issues before they snowball.

In 2025, credibility matters more than ever, but that doesn’t mean you need an audit. A professionally prepared compilation offers a practical, cost-effective solution for SMEs who need reliable financials without the complexity and cost of assurance services.