Audits - Reviews - Compilations

Business owners, stockholders, creditors, and private investors often need assurance that the financial statements accurately represent the true financial position of a company.  Each of these invested parties have different levels of risk tolerance, so we provide three levels of assurance to meet your needs.

 

Compilation - Lowest Level of Assurance

 

In compiling financial statements for a client, we present information that is the "representation of management" and expresses no opinion or assurance on the statements. Compilations don't require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business to prepare reports that are useful to you the business owner.

Banks often require compilations from an independent CPA as part of their lending covenants.

 

Review - Limited Assurance

Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company's management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.

A review doesn't require us to study and evaluate your company's internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: "We are not aware of any material modifications" for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.

Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA's technical expertise without the work and expense of an audit.


Audit - Highest Level of Assurance

An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by general practice.  It also examines a companies internal controls to ensure the integrity of the financial information presented.

 
When would a client need an audit?  Some governing entities may ask for audits as a requirement in keeping a permit.  A client may also need an audited financial statements as a requirement of some creditors.  Whatever the circumstance, an audit provides the highest level of assurance to those who are examining the financial information.
 
While our staff is more than capable of performing audits, our client focus is on tax and accounting solutions to benefit individuals and small-to-medium companies (less than 500 employees, closely held, not publically traded).  It is rare for companies of this size to be required to have audited financial statements.  However, for clients needing this service, we outsource to reputable auditing firms with whom we have networked.  This leaves us free to take care of your most difficult and time consuming tax and accounting problems and to find answers and solutions to make your business more profitable.
 
In other words, audits take us away from the office and away from the clients we most desire to serve!

Which Report Should You Use?

Each type of financial statement report may suit specific circumstances, depending on requirements from your client's bank or other parties, as well as meet budgetary needs.

Understanding each report's unique strengths and weaknesses can help you choose the most appropriate one. Please call if you have questions about which type of report is right for you.

 




Schedule a Consultation


Get In Touch


Featured Articles


Subscribe to our Emailed Newsletter