Audit, Review & Compilation Services
Assurance services are important since they provide the users of financial statements with the comfort that the financial statements are reliable and prepared under generally accepted accounting principles (“GAAP”). GAAP is a prescribed set of accounting principles designed to ensure companies are reporting results both correctly and on a consistent basis.
Assurance engagements consist of either one of two types: an Audit or a Review Engagement. Both engagements provide a level of assurance to the users that the information provided has been analyzed by an independent and objective third party who reports on the results of their analysis.
Our role is to perform the work and provide a report to the financial statements outlining the results of the analysis. We take pride in understanding your business, identifying possible risk areas, planning our work and executing in an efficient and effective manner to complete the engagement with as little interruption to your business. Contact us for more information.
Types of Engagements
- Audits provide the highest level of assurance to the user of the financial statements and therefore require the most thorough analysis of the financial data.
- Review engagements are also a type of assurance engagement but the extent of the procedures performed are limited in comparison to an audit engagement.
- Compilation engagements consist of the preparation of basic financial statements but these engagements do not provide the users with any level of assurance.
An audit engagement involves a detailed analysis of the accounting records and the disclosures included in the financial statements. In an audit, a variety of procedures are performed using different methods of analysis including inquiries, physical verification, transactional testing, confirmation with other third parties and analytical review to name a few.
Usually, this type of engagement is required by a user of the financial statements. An example would be a bank that provides significant financing that may require an audit to ensure the financial statements are reliable for them to assess the creditworthiness of the company and its continued ability to meet its financial requirements. In addition, some companies choose to conduct an audit for future financing needs, a future sale or just added comfort in the quality of their financial reporting. Get in touch today to learn more.
A review engagement is designed to establish whether there are any inconsistencies within the financial information. This type of engagement using techniques such as inquiries, analytical review and discussions with members of your team to assess the quality of the information; however, it is not as comprehensive as an audit. A review engagement is typically less expensive than an audit and is a good compromise for companies that want some added assurance to their financial statements but don’t want to incur the added cost of an audit.
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This is the most basic level of financial statement service that accountants provide. This service does not provide assurance with respect to the financial statements and whether they are materially misstated. Instead, it consists of compiling and displaying the data in a financial statement format. These reports are not prepared in accordance with any professional accounting standards.
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Financial statements drive decision making
- An Audit Engagement ensures you have the most accurate representation of the financial health of your company.
- A Review Engagement provides you with an overview with highlights.
- A Compilation Engagement offers a financial statement for presentation.
An audit engagement is the most comprehensive report you can obtain. With an audit engagement, you have the highest level of assurance in your financial report. A review engagement is less intensive and provides limited assurance as compared to an audit.
Since the audit is more comprehensive, it involves more work and testing to gather the audit evidence as support for the final report. As a result, it is more expensive than a review engagement. The decision between whether to do an audit or a review will likely be determined based on the needs of the current and potential future users of the financial statements.
The ultimate responsibility is with the company and its management. Financial statements are owned by the business. The report that goes on the front of the statements is the responsibility of the engaged CPA. CPAs will provide assistance to businesses helping them draft their financial statements but these statements would need to be approved by management.
Yes. The CPA must provide an independent and objective assessment of the financial statements which is integral to whole assurance process and increases the confidence of the user in the financial statements. CPAs are regulated by strict independence rules to ensure the integrity of the assurance engagement process.
The primary starting point is understanding what your business does and how it does it. This allows the CPA to properly plan the engagement and determine what steps are required to execute to complete the engagement. Planning the engagement will consist of determining risk areas and developing a detailed audit plan outlining what procedures will be completed to assess the areas of risk in order to gather sufficient evidence to support the report to the financial statements