Lenders, stockholders, creditors, and private investors often request financial statements prepared by an outside firm.  Sometimes they request more assurance and request a compiled or reviewed financial statements.

Your stockholders, creditors, or private investors have different levels of risk tolerance, so we provide three levels of service to meet your needs.

Financial Statement Preparation - No Assurance

In preparing financial statements, we use information from your accounting system to prepare financial statements on your behalf. These financial statements, while primarily intended for management and internal business users, are not limited to that purpose. We do not issue an accountant's report or explanatory notes to accompany these financial statements. At the bottom of each page there is a foot note that states "These financial statements have not been subject to a compilation, review, or audit engagement."

Compilation - Lowest Level of Assurance

In compiling financial statements for a client, we read the financial statements for material misstatements that are evident as a result of our knowledge of your business and the industry in which you operate. The financial statements are the "representation of management" and and we express no opinion or assurance on the statements. Compilations don't require inquiries of management or analytical procedures. You may choose to have us include certain additional disclosures about your financial statements to help the reader better understand them, but it is not required.

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 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. Reviewed financial statements include certain footnotes and other disclosures about your Company's financial statements to help the reader better understand them.

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 the Generally Accepted Accounting Principles (GAAP).

Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA's technical expertise without the work and expense of an audit.

  

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 meet budgetary needs.

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.

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 or complete the form below for a free consultation.

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