Stockholders, creditors, and private investors often need assurance that the financial statements accurately represent the true financial position of a company.
Your stockholders, creditors, or private investors have different levels of risk tolerance, so we provide two levels of assurance to meet your needs.
Review - Limited Assurance
A review engagement, less extensive than an audit but more involved than a compilation, 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 Generally Accepted Accounting Principles (GAAP), Other Comprehensive Basis of Accounting (OCBOA), Income Tax Basis or other accepted methods of accounting. Reviewed financial statements must include all required footnotes and other disclosures.
Why might a business request a review engagement? It can provide the advantages of a CPA's technical expertise without the work and expense of an audit.
Banks often require reviews from an independent CPA as part of their lending covenants.
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 practice and a general understanding of your business.
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. If you ultimately determine that an audit would best serve your company's needs, we can provide you with the names of local firms that provide audit services.
