What are the levels of service?
The three general levels of financial statement service are compilation, review and audit. Other types of special services that can be considered hybrids of the three general service levels are also available.
A separate, distinct service, known as agreed-upon procedures, illustrates the range of options. In this service, the client and the user agree on the specific procedures that will be employed.
Presenting the results of those procedures instead of supplying a full set of financial statements may satisfy a creditor or banker needing assurance that your company’s inventory and accounts receivable are accurately stated but not requiring assurance as to the rest of the financial information.
We offer a free consultation to business owners to review your current status and help you pick the most cost-effective service.
Now- exactly what do these levels of Financial Statements involve?
What is an audit?
An audit involves performing procedures that provide us with enough assurance to offer an opinion as to whether your financial statements are fairly presented and are in conformity with generally accepted accounting principles.
The auditor’s goal is to determine whether the financial statements are free of material misstatement. An audit requires extensive inquiry and study of the organization’s policies, procedures, systems, operations and financial management.
Items are observed, tested, confirmed, compared or traced based on their importance and risk.
As an additional benefit, the auditor may become aware of some inefficiencies or weaknesses in the organization’s systems and offer suggestions for improvement.
What is a review?
A review is conducted when a lower degree of assurance than an audit is acceptable, yet the user wants a limited degree of assurance of the statements.
Frequently, clients or users think they need an audit when a review or even a compilation may satisfy their needs. A review is significantly smaller in scope than an audit and thus much less expensive.
During a review, we will inquire about your business, your accounting policies and procedures, your industry, operations and personnel.
In addition, we’ll conduct a battery of analytical procedures, such as ratio analysis, comparison of your operating statistics to prior periods or perhaps to industry averages, as well as other financial analyses deemed appropriate.
What is a compilation?
A compilation is a rough equivalent to your doctor’s assessment based only on your description of your symptoms.
A compilation involves gaining a general understanding of your business and bookkeeping system and presenting your financial information in the accepted format of proper financial statements.
Further options lie within the compilation level of service. The compilation report may be a full disclosure report with complete footnote explanations of certain amounts and policies contained in the financial statements. Or, you may opt to omit substantially all of these otherwise required disclosures. Omission of this information is not permissible under the other levels of service.
Other related services – Ask us about the following types of services that can contribute to your success:
- Business succession planning
- Cash flow and budgeting analysis
- Consulting services
- Financial forecast and projections
- Specific agreed upon procedures to identify areas of financial strengths, weaknesses, and opportunities.