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What
are "client assistance procedures?" |
They are procedures that are considered part of a
client’s normal accounting responsibilities. In other words, procedures or
tasks required in order to record, value, or summarize accounting balances and
transactions and to present this information in financial statement form with
appropriate information for the notes to the financial statements. Auditor
assistance with these procedures can include performing the procedures,
assisting with the performance of the procedures or consulting about the
procedures. Some examples include assisting with accounting estimates, accruals
and closing journal entries.
If, instead of the shorter term tasks described
above, you're looking for more substantial or longer term assistance, we can
provide you with Temporary
Accounting Professionals.
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Why
aren’t these procedures included as part of an audit or
review? |
The reasons stems from the nature of the
engagement. An audit or review is a "reporting" engagement that
presumes the completion of normal accounting entries such as year-end accruals
or adjustments. Accounting assistance, on the other hand, consists of
procedures that are normally performed prior to an accountant being able to
perform "reporting" focused procedures.
Generally, we find that clients prefer to
separate the fees they pay for "reporting" services from the fees
they incur for "accounting assistance." This allows a client to
exercise more discretion over which accounting procedures should be delegated
to the client's own staff and those which are better delegated to the outside
accountant.
What about those small, year-end
"clean-up" adjustments?
The objective of an audit is to form an opinion
about whether financial statement taken as a whole are fairly stated, in all
material respects, in accordance with a comprehensive basis of accounting,
such as generally accepted accounting principles. The concept "taken as a
whole" means that audit procedures are directed toward overall financial
statement presentation as opposed to individual general ledger account
balances. The concept "fairly stated, in all material respects"
means that audit procedures are also directed toward detection of large
misstatements that would have a significant effect on the presentation of or
disclosure about the financial statements. As a result, while smaller
misstatements might be detected through normal auditing procedures,
identification of such misstatements is not the purpose of the audit.
Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Concepts No. 2, Qualitative Characteristics of
Accounting Information defines materiality as "the magnitude of an
omission or misstatement of accounting information that, in the light of
surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would have been changed or influenced by the
omission or misstatement."
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When
to request accounting assistance |
The answer as to when to request assistance
varies. Sometimes, you do not have enough time or personnel to perform all necessary accounting procedures—especially at
year end. Or you may have limited experience in areas for which accounting adjustments or estimates are necessary. Other times it
may simply be a matter of convenience.
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How
to assess your
need for assistance |
The simplest way is to ask. Another way is to send
the client a list of possible procedures—a sort of menu—and let the client
select the areas in which they would like assistance. This menu could become
part of the client/auditor understanding. Since each client is different,
there may be other areas of assistance that the client desires, but are not
included on the list that follows. These areas can be added to the list as
necessary.
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How
does this relate to audit or review engagements? |
Part of the auditor/client engagement
understanding is the degree, if any, to which the auditor assists a client
with tasks that are not considered part of normal auditing procedures. That is
not to say that a client does not value or desire these procedures. For many
of the reasons illustrated above, a client may choose to supplement their own
in-house expertise with that of their outside accountant.
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Who to contact
for more information. |
Any of our audit and accounting professionals
can help you assess the level of supplemental accounting assistance you might desire. For
starters, you can contact Jeff Fineis
(Greater Lansing), Roger
Hitchcock (Auburn Hills), Stephen Miller (Grand Rapids), Dave Mikolajczak (Bay City), Ed McKibbon (Auburn
Hills), Randy Morse (Saginaw), or Duane
Reyhl (Saginaw) for their ideas.
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Examples
of client assistance procedures. |
We have provided a chart
of examples to help show you some of the specific ways that our staff can help
you supplement your expertise with ours. The examples are categorized both by
general financial statement areas and by functional areas.
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