Your financial statements are a historical record of the financial position of your company. Third-party users such as creditors, bankers, and investors often need some level of assurance that those statements are accurate.
Our firm provides the following levels of attest assurance services:
Audit – Highest Level of Assurance
An audit provides the highest level of assurance. An audit is an objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by general practice.
Our work includes a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.
Review – Limited Assurance
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures applied 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 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 Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.
Compilation/Preparation – 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.
Just recently a pronouncement also allows for a CPA firm to help a client prepare financial statements without the issuance of an accountant’s report. Although limited in scope, there may be instances where this level of service best suits the need of the client.
Which Level of Assurance Is Appropriate?
Each type of financial statement report may suit specific circumstances, depending on requirements from your bank or other parties.
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.