AUDITS, REVIEWS & COMPILATIONS

So just want do these names mean. They can be very confusing. A lot of the time, a company will state that they need an audit to be performed, which can be very expensive, when all they need is a compilation or some form of agreed upon procedures. Your bank may require a compilation in order for your company to obtain a loan. A company that is leasing you an expensive piece of equipment may want you to provide them a compilation. Sometimes a compilation may be required for a bond or some type of specialty work. The owners or partners that are not active in the business on regular basis may want an annual compilation.

Below is a description of what an audit, review and compilation are. Contact us today to help you digest this information and determine what your needs are.

AUDIT

The purpose of an audit is to provide financial statement users with an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with an applicable financial reporting framework. An audit conducted in accordance with generally accepted auditing standards and relevant ethical requirements enables the auditor to express an opinion on the financial statements.

An audit requires the auditor to obtain an understanding of the entity’s internal control; assessfraud risk; tests accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, the examination of source documents; and other procedures in order to enable the auditor to render an opinion on the financial statements.

Review

A review of financial statements involves the performing inquiry and analytical procedures that provide the accountant with a reasonable basis for expressing limited assurance that there are no material modifications that should be made to the statements for them to be in conformity with general accepted accounting procedures or, if applicable, with another comprehensive basis of accounting.

Compilation

A compilation of financial statements involves the presenting in the form of financial statements information that is the representation of management (owners), without undertaking to express any assurance on the statements. A compilation differs significantly from a review or an audit of financial statements. A compilation does not contemplate performing inquiry, analytical procedures, or other procedures performed in a review. Additionally, a compilation does not contemplate obtaining an understanding of the entity’s internal control; assessing fraud risk; tests of accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, the examination of source documents; or other procedures ordinarily performed in an audit. Therefore, a compilation does not provide a basis for expressing any level of assurance on the financial statements being compiled.

Agree on procedures are exactly what they sound like. We would meet with you to determine what detail work you want perform and then summarize and detail the work. For example, you might want us to examine supporting documents for all disbursements over a certain amount. This procedure is used when there are certain parts of the accounting process that you want examined but not the entire process.

Non profits

Today’s not-for-profit organizations face higher expectations of accountability, transparency, and corporate governance. Auditors of not-for-profits also must deal with requirements that enable them to maintain their independence. This is where we can help.