Stockholders, creditors, and private investors often need assurance that the financial statements provided to them accurately represent the true financial position of a company. This requires the services of CPA-prepared Financial Statements. We offer the following two types of assurance services to serve your financial statement needs:
Reviewed Financial Statement – Limited Assurance
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to 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, 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 very good middle ground, providing the advantages of a CPA’s technical expertise without the work and expense of an audit.
Compiled Financial Statement – 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.
Banks often require compilations from an independent CPA as part of their annual lending covenants.
Which Report Should You Use?
Each type of financial statement report may suit specific circumstances, depending on requirements from your bank or other parties, as well as your budgetary needs. Understanding each report’s unique strengths and weaknesses can help you choose the most appropriate one. Please contact us if you have questions about which type of report is right for you.