Compilation Engagement Letter Template for Switzerland

A Compilation Engagement Letter is a formal agreement that establishes the terms and conditions when you engage an accounting firm to help prepare your financial information. Unlike audit or review services, compilation engagements provide no assurance on the accuracy or completeness of your financial statements. This document protects both you and your accounting firm by clearly defining responsibilities, limitations, and expectations for the professional relationship.

When do you need this document?

You need a Compilation Engagement Letter when your business requires professional assistance in preparing financial statements but doesn't need the higher level of assurance provided by audit or review services. This is particularly common for smaller companies, private businesses, or organizations that need professionally prepared financial statements for internal use, tax purposes, or to meet contractual obligations with lenders or investors. Many Swiss companies use compilation services when they lack internal accounting expertise or need to ensure their financial statements follow proper accounting standards while keeping costs lower than full audit services.

Key legal considerations

The engagement letter must clearly state that no assurance is being provided on your financial information, protecting the accounting firm from liability for undetected errors or misstatements. It should define management's responsibilities for providing complete and accurate information, maintaining internal controls, and making all significant business decisions. The document must specify the scope of work, including which financial statements will be compiled and any limitations on the engagement. Professional independence requirements, confidentiality obligations, and data protection measures should be addressed. The letter should also clarify that the compiled financial statements are intended for management use and may not be suitable for other purposes without additional procedures.

Legal requirements in Switzerland

Under Swiss law, compilation engagements are governed by the Swiss Code of Obligations (CO), particularly Articles 394-406 relating to mandate contracts for professional services. The engagement must comply with Swiss Standard on Related Services (PS 920), which provides specific guidelines for compilation work including scope, objectives, and professional responsibilities. Your accounting firm must adhere to the Swiss Federal Act on the Licensing and Oversight of Auditors (AOA) if they are licensed auditors. The Federal Act on Data Protection (FADP) requires proper handling of your financial and personal data throughout the engagement. The letter should specify Swiss law as the governing jurisdiction and include provisions for dispute resolution under Swiss legal procedures.