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Seeking a line of credit? Looking to increase your spending with a vendor, or credit limits on a commercial credit card? Often you'll be asked to provide a financial statement for consideration, and many times you can just submit a printout from your accounting software. But just as often you'll be asked to submit a financial statement from your accountant. We can help you consider the options.
Audit - The Highest Level of AssuranceWhile the most comprehensive in it's reporting and in level of assurance, it's also the most costly. It's also one of the most misunderstood of accounting services. Business and lay people alike typically use the term "audit" to mean "checking up" on any aspect of a buiness and its performance. However, for accounting professionals it has a very specific meaning very different from the public understanding. In any case, because of the enormous cost and professional resources involved in an audit, our firm does not perform such work. We do perform reviews and compilations, and most often one or the other meets the needs of the requesting creditor or organization. We can discuss this with you in detail.
Review - Limited AssuranceLess 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. 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). Reviewed financial statements must include all required footnotes and other disclosures. 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.
Compilation - Lowest Level of AssuranceIn 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 lending covenants. 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. 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.  4129 Okemos Rd, Suite 5 Okemos, MI 48864 Hello: (517) 336-2727 info@cpashark.net |
