Compilation Of Financial Statements
A compilation is the most basic level of attest service related to financial statements that a CPA may provide. It consists of assisting management with presenting financial information in the form of financial statements that appear appropriate in form. A compilation is performed in accordance with Statements on Standards for Accounting and Review Services and does not contemplate providing any assurance about whether the financial statements are materially correct in accordance with the applicable financial reporting framework [e.g. Generally Accepted Accounting Principles (GAAP) or an Other Comprehensive Basis of Accounting (OCBOA)]. A compilation is generally used by management for internal monitoring or decision making purposes or for tax compliance purposes.
Review Of Financial Statements
A review is an intermediate level of service related to financial statements. It consists primarily of inquiries to management and analytical procedures performed by the CPA to obtain limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with applicable financial reporting framework. A review is performed in accordance with Statements on Standards for Accounting and Review Services and provides only limited assurance that the financial statements are materially correct in accordance with the applicable financial reporting framework. A review is generally used at the request of third parties for the purpose of debt financing or to meet regulatory or licensing requirements.
Audit Of Financial Statements
An audit is the highest level of service that can be provided related to financial statements. An audit involves obtaining an understanding of the entity’s internal controls, assessing fraud risk, and obtaining audit evidence through inquiry, physical inspection and observation, third party confirmations analytical procedures and other procedures as required in the auditor’s judgment sufficient to support amounts and disclosures included in the entity’s financial statements. An audit is performed in accordance with auditing standards generally accepted in the United States of America. The purpose of the audit is to provide the user with the auditor’s opinion that the financial statements are presented fairly, in all material respects, in conformity with the applicable financial reporting framework. An audit is generally required due to third party debt requirements, regulatory or licensing requirements, or to provide additional assurance to owners or other interested parties who are not active in the daily operations of the entity.
Agreed Upon Procedures
Agreed upon procedures are services tailored to our client’s specific requirements. These services include testing specific internal controls or support for individual accounts related to the entity’s financial statements. These services are generally requested to address specific issues or concerns identified by the client.