Audits, Reviews and Compilations

Stockholders, creditors, and private investors often need assurance that the financial statements accurately represent the true financial position of a company. We provide three levels of assurance in regard to financial statements in order to meet your needs.
  • Audits - often prepared for private and public companies because third parties (such as banks, creditors, investors, and potential purchasers) require an auditor's opinion on the company's financial statements.
  • Reviews - often prepared for privately held companies because of certain requirements placed on them by third parties (such as banks, creditors, and potential purchasers).
  • Compilations - appropriate for privately held companies and are often prepared for company’s lenders.                               
Audit (Highest Level of Assurance)
An audit provides the highest level of assurance that a company’s financial statements are present fairly in accordance with U.S. Generally Accepted Accounting Principles (GAAP) or another basis of accounting. Audited financial statements provide users with the auditor's opinion that the financial statements are presented fairly and in all material respects in conformity with applicable financial reporting framework.
           
In an Audit engagement we are required to evaluate company's internal controls over financial reporting and assess fraud risk. We are also required to obtain audit evidence by performing physical inspections, observing your inventory counting, testing of selected transactions, inquiries with third parties (customers, banks, vendors, attorneys), and performing of analytical procedures. Based on our findings, we issue a report on whether the financial statements present fairly in all material respects the financial position and results of operation of your company. Our audit documentation will include all the details about the work we performed including results of all examinations and testing performed, as well as supporting work papers.
 
Audits are Not Just for Public Entities
All public companies are required to have an annual audit. However, some nonpublic entities must also undergo an annual audit. These include all not-for-profit agencies and other organizations receiving government grants.

Also, many states have a revenue threshold that would trigger the audit requirement. In addition, some lenders require audits of nonpublic companies based on the financing amount.
           
Even if an audit is not required, some organizations may choose to have their financial statements audited. An audit can provide reasonable assurance to the governing body and users of financial statements that there are no material misstatements or risks of fraud.
                                   
Review (Limited Assurance)
Reviews do not provide the same level of assurance as audit. A review engagement consists primarily of analytical procedures applied to the financial statements and inquiries of company's management. Reviewed financial statements provide the user with comfort that the accountant is not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles (GAAP).
           
A review doesn't require evaluation of your company's internal controls, verification of data with third parties, assessing fraud risk, or other procedures ordinarily performed in an audit. The main factors that differentiate a review from a compilation – is the requirement that our professionals must remain independent of the client, and all appropriate footnotes and disclosures must be included in the reviewed financial statements. Our Review report will expresses limited assurance in the form of the statement affirming that we are not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles and that company's management is responsible for fair presentation of the financial statements and for designing, implementing, and maintaining relevant internal controls.
                                   
Compilation (Lowest Level of Assurance)
Compiled financial statements represent the most basic level of service CPAs provide in regard to financial statements.
           
In a Compilation engagement, we assist company's management in preparation of financial statements (monthly, quarterly, or annually) without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles (GAAP).
           
Through compilation services, we will prepare your company's financial statements, based on the information provided by you, without expressing opinion or assurance as to whether material (or significant) changes are necessary for the statements to be in conformity with generally accepted accounting principles (GAAP).

A Compilation does not require inquiries of management, analytical procedures, or other procedures ordinarily performed in a review or an audit. Instead, we will rely on our knowledge of accounting principles and a general understanding of your business.
 
Which Financial Statement Report Should You Use?
Each type of financial statement report may suit your specific circumstances. The level of service is determined by your needs and what your creditors and investors require.

Please call us or submit your inquiry by email if you have questions about which type of report is right for you.
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