Stockholders, board members, creditors and private investors often need assurance that the financial statements accurately represent the true financial position of a company. Federal, State or local laws and regulations may require non-profit organizations, condominiums and homeowners associations to have an audit, review or compilation.
Your stockholders, board members, creditors or private investors have different levels of risk tolerance. Plus, Federal, State or local requirements may require financial reporting. As such, we provide three levels of assurance to meet your needs.
Audit: Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical analysis and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by the American Institute of Certified Public Accountants (AICPA).
Our work includes a risk assessment analysis of the Business/Organization, review of internal controls, testing of selected transactions and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.
An audit allows you to:
Here is what you get:
You get the highest level of assurance being that we analyze your Business/Organization. Typically, we will have written communication with:
We also determine if your accounting methods/system conform with Generally Accepted Accounting Principles (GAAP). We perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client's supporting work papers.
Audits - Not Just for Public Entities
All public companies are required to have an annual audit, but some nonpublic entities must undergo an annual audit as well. These include privately held businesses, special districts, certain 401k retirement plans, condominiums and homeowner associations, not-for-profit agencies and other organizations receiving government grants. Also, the Florida Statutes may require not-for-profit organizations and CIRAs (COAs, HOAs, and Master Associations) to have an audit performed based on the CIRAs revenue thresholds or contributions of the not-for-profit organizations.
Moreover, some financial institutions require audits of nonpublic companies based on the financing amount and/or the bank's assessment of the company's risk. Also, companies with absentee ownership (such as those owned by investment firms or individuals who no longer run the business) may order audits to check on their management teams.
Review: Limited Assurance
A review is less extensive than an audit, but more involved than a compilation. A review engagement consists primarily of analytical procedures that 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 does not require us to study and evaluate your company's internal controls, 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. Also, the Florida Statutes may require not-for-profit organizations and CIRAs (COAs, HOAs, and Master Associations) to have a review performed based on the CIRAs revenue thresholds or contributions of the not-for-profit organizations.
Compilation: Lowest Level of Assurance
In compiling financial statements for a client, we present information that is the "representation of management" and express no opinion or assurance on the statements. Compilations do not require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your Business/Organization.
Banks often require compilations from an independent CPA as part of their lending covenants. Also, the Florida Statutes may require not-for-profit organizations and CIRAs (COAs, HOAs, and Master Associations) to have a compilation performed based on the CIRAs revenue thresholds or contributions of the not-for-profit organizations.
Which Report Should You Use?
Each type of financial statement report may suit specific circumstances, depending on requirements from your client's, bank, federal, state or local laws and regulations or other contractual obligations.
If you need assistance, please contact us at 1-855-STROEMER or JamieR@StroemerCPA.com, se habla espanol.