Stockholders, creditors and private investors often require assurance that financial statements are accurate representations of a company’s financial state. Stolberg, Ebbeling & Blanchette provides three levels of assurance to appropriately meet your business needs.
Audit-Highest Level of Assurance
An audit is a methodical review and objective examination of your company’s financial statements. Specific information is verified as determined by either the auditor or by general practice.This includes a review of internal controls, testing of selected transactions and communication with third parties. We then issue a report on whether the financial statements are fairly stated and free of material misstatements based on the findings.
Essentially, an audit allows you to:
- Prove the credibility of published information to stakeholders such as employees, customers and the investing community.
- Facilitate tax payments (corporate, goods and services, etc,) on-time and accurately, thereby avoiding interest, penalties and investigations.
- Comply with banking covenants.
- Help deter and detect material fraud and error.
- Facilitate the purchase and sale of businesses.
With an audit, you will receive the highest level of assurance because we go outside of your company to obtain information. Typically, we’ll have written communication with:
- Your customers, to check outstanding receivable balances,
- Your banks, to confirm cash or debt balances and terms,
- Your vendors, to verify outstanding payable balances, and
- Your attorneys, for information on pending or threatened legal action.
In addition to this, we perform physical inspections by observing your inventory counting methods and performing test counts. We also document and test the operating cycles your business uses. These include sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers provide detailed documentation of the performed tests and examinations.
Review – Limited Assurance
A review is less extensive than an audit. Many businesses request a review engagement because it provides the advantages of a CPA’s technical expertise without the procedural aspects and expense of an audit.
When conducting a review, we analyze financial statements and make various inquiries of your company’s management team. If we find any inconsistencies, additional procedures may need to be performed.
A review does not provide an evaluation of your company’s internal controls or third party data verification. Rather, it expresses limited assurance in the form of the statement, “We are not aware of any material modifications.” This verifies that financial statements are in conformity with the Generally Accepted Accounting Principles (GAAP).
Compilation – Lowest Level of Assurance
When compiling financial statements for a client, we present information that is the “representation of management.” Essentially, this expresses no opinion or assurance on the statements. Compilations do not include management inquiries or analysis of procedures. Instead, we rely on our knowledge of accounting principles and and a general understanding of your business.
Which Report Should You Use?
We know that understanding the strengths and weaknesses of each report is important in helping choose the most appropriate one for your business. This is dependent on the requirements set by your bank or other parties, as well as your business’s budget. Contact us and we will help you determine which type of report is best for you.