A lot of businesses often fail to consider if they are getting the appropriate level of financial statement services or they default to audits because that is what they are familiar with. In reality, the accountants provide three levels of financial statement services that are extremely crucial for an established transparency and financial efficiency. Let’s discuss them in brief!
A compilation is the one of the lowest level financial statement services an accountant can provide. The objective of compilation is to assist management in presenting financial information in the form of financial statements. A compilation consists essentially of presenting information obtained from a client in financial statement format. A compilation involves gaining a general understanding of your business, accounting principles used and financial reporting system. Compilation is presenting financial information in the accepted format of proper financial statements.
A review differs significantly from an audit. Review engagements provide less assurance to the reader of the financial statements because the CPA does not perform many audit procedures. The range of procedures required to be performed by the CPA is exhaustive, however, not as detailed as a full audit. A professional CPA conducts inquiries as to the accounting practices and principles used by the business are valid or not. A stringent procedure for recording and accumulating financial information, actions taken at owners’ or directors’ meetings and documenting it in written representation to maintain the accuracy of all information given to the CPA. Review process also encircles analytical procedures regarding comparisons to match the expectations developed of recorded amounts.
An audit is the highest level of financial statement service a CPA can provide. Auditing enhances the degree of confidence that the lenders or investors can place in the financial statements.The purpose of having an audit is to provide a financial statement with an opinion on whether the financial statements are prepared in accordance with the proper financial reporting framework or not. Audit process involves a multitude of processes ranging from inquiring of management and others to gain an understanding of the organization itself, financial reporting and known fraud or error. It is essentially evaluating and understanding the internal control system thoroughly to find out any loopholes. Having these carefully in your financial arsenal is very important for the authenticity of your company at. It is important to find the proper balance between the cost of the CPA’s services and the level of assurance the users of the financial statements require. At PSR CPA accounting company we operate with the highest level of assurance and integrity to bring credibility to your financial statements.