Proper and timely financial statements are key tools for the management of your business. We view our role in the financial reporting process as an opportunity to provide constructive solutions for maximizing your company’s profitability and efficiency. Generally, as CPAs, we can provide three levels of assurance in an accountant’s report that accompanying your financial statements: a compilation, a review or an audit.
Compilation – No Assurance
In compiling financial statements for a client, we present information that is the “representation of management” and express no opinion or assurance on those statements. Compilations don’t require inquires of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
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 consist 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 control 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 Generally Accept Accounting Principles (GAAP) or an other comprehensive basis of accounting (OCBOA). Reviewed financial statements must include all required footnotes and other disclosures.
The highest level of assurance comes from a complete audit of your financial statements and the transactions behind them. Currently, our practice is limited to the preparation of compiled or reviewed financial statements. However, should you have the need for audited financial statements, we will be happy to consult with you regarding your options.
Upon completion of periodic financial statements using either compilation or review services, we can then sit down with you and review the true meaning of the numbers on the financials as it relates to your business and supply seasoned input to your budgeting and financial planning processes.
