As certified public accountants, we are trained and licensed to attest to the fair presentation of the financial statements of various types of organizations. We provide three levels of attest services to meet the needs of your organization.
Audit - Highest Level of Assurance
The objective of an audit is the expression of an opinion about whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Audits include tests of the organization's accounting records and other procedures that are considered necessary to enable the auditor to express such an opinion.
Audits include obtaining an understanding of the organization and its environment, including internal control, sufficient to design the nature, timing, and extent of further audit procedures. An audit is not designed to provide assurance on internal control or to identify deficiencies in internal control. However, internal control related matters that are noted during an audit are communicated to those charged with governance.
Certain entities may be required to have an annual audit, including local governments, not-for-profit agencies, other organizations receiving government grants, and some employee benefit plans. Some financial institutions require audits of companies based on the financing amount and/or the bank's assessment of the company's risk.
Review - Limited Assurance
Less 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 does not require us to study and evaluate your company's internal controls or perform many of the tests and procedures required in an audit. 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 Assurance
In compiling financial statements for a client, we present information that is the "representation of management". We express no opinion or assurance on the statements. Compilations do not require inquiries of management or analytical procedures. The responsibility of the CPA is to conduct the compilation in accordance with professional standards with the objective of assisting management in presenting financial information in the form of financial statements.
Banks and other creditors may require compilations from a CPA as part of their lending covenants. Compilations may also be a useful tool for company management.
Which Report Should You Use?
Eash type of financial statement may suit specific circumstances, depending on requirements from your bank or other parties, as well as meet budgetary needs.
At Girardot, Strauch & Co., we've been serving the accounting needs of Lafayette, IN and the surrounding areas for years. If you need help managing any aspect of your home or business's finances, we want to hear from you.
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