Creditors and investors will often require financial statements which have been analyzed by a CPA firm. Shareholders, creditors, and private investors often need assurance that financial statements accurately represent the true financial position of a company.
As your business grows and creditors and investors request official CPA statements, Bangerter, Lund & Associates, Inc. is here to help.
Auditing services provided by Bangerter, Lund & Associates, Inc. include all three types of reports:
- Compilation report
- Review report
- Audit report
The type of report is determined by mutual agreement between the client and the CPA. This determination usually depends on many factors, such as the needs of the client, requirements of creditors or investors, the size and complexity of the business, and other considerations. Privately-held companies often opt for reviewed or compiled statements. However, agreements with lenders and other business relationships may require audited statements for private companies.
As the most basic level of financial statement analysis, a Compilation of financial statements is limited to presenting in the form of financial statements information that is the representation of management or owners. A key characteristic of a compilation is that no opinion or any other form of assurance is expressed on the fairness of the presentation of the financial statements. Upon completion, a report on the financial statements is issued that states a compilation was performed in accordance with AICPA professional standards, but no assurance is expressed that the statements are in conformity with generally accepted accounting principles. This is known as the expression of "no assurance."
Compiled financial statements are often prepared for privately held entities that do not need a higher level of assurance expressed by the CPA.
Reviews consist principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit, and provides greater information and assurance than a compilation due to the inquiry and analytical procedures required in addition to the standard compilation report requirements.
A review does not require an evaluation of the company's internal controls, verification of data with third parties, or physical inspection of assets as does an audit. Reviewed financial statements must include all required footnotes and other disclosures.
Reviewed financial statements are often prepared for companies which have bank loans, outside investors, or trade creditors, when those third parties do not require audited statements.
Audits
Audits provide an entity with the highest level of assurance offered by a CPA firm. In addition to the requirements for Compilation and Review reports, a CPA firm must perform verification and substantiation procedures as well as gain a knowledge and understanding of the entity's system of internal control.
When the audit is completed, the CPA's standard audit report states that an audit was performed in accordance with generally accepted auditing standards, and expresses an opinion that the financial statements present fairly the entity's financial position and results of operations. This statement is not a guarantee of absolute accuracy, but that the CPA can offer reasonable assurance that entity's financial statements are free from material misstatement.
Regardless of your need, Bangerter, Lund & Associates, Inc. can help. Our expert staff has helped many firms with each type of report, and we look forward to helping you.
If you are uncertain which service you need, please give us a call. We are always happy to answer your questions and provide direction to help your business grow.
