Financial Statement Assurance

Financial Statement Audits

A financial statement audit is an independent examination of an organization’s financial records, transactions, and reporting processes to determine whether the financial statements are presented fairly and in accordance with applicable accounting standards, such as Generally Accepted Accounting Principles (GAAP).

During an audit, our CPAs evaluate financial data, test selected transactions, review supporting documentation, and assess internal controls to obtain reasonable assurance that the financial statements are free from material misstatement. The result is an auditor’s report that provides an opinion on the accuracy and reliability of the financial statements.

Financial statement audits are commonly required by lenders, investors, regulatory agencies, grantors, and governing boards, while also providing management with valuable insight into financial reporting practices and internal control processes.

Financial Statement Reviews

A review is a procedures-driven engagement where an accountant expresses “limited assurance” (but not an opinion) about financial statements. In expressing limited assurance, an accountant states whether or not the financial statements contain material modifications that should be made in order for them to conform with a basis of accounting, for example, generally accepted accounting principles. In a review engagement, the accountant performs analytical procedures and inquiries of entity management to obtain a reasonable basis for the limited assurance.

Compiled Financial Statements

Compiled financial statements are a service where the accountant presents, in the form of financial statements, information that is the representation of an organization’s management (owners) without undertaking to express assurance on the financial statements. At management’s election, the financial statements may be prepared with substantially all disclosures omitted. Common financial statement bases of accounting used for compilations include accrual basis, cash basis, and income tax basis. The accountants’ report is issued, but provides no financial statement assurance.

Personal Financial Statements

Sometimes called a statement of net worth, these are financial statements of an individual and/or spouse. The financial statements are prepared using the fair market values of the individual’s assets and liabilities. Personal financial statements may be audited, reviewed, or compiled. Personal financial statements are commonly used in arranging for financing or estate tax planning.