The difference in each is significant. In most cases, audits, reviews and compilations are necessary to comply with the requirements of banks and lending institutions, suppliers, regulatory agencies or others who rely heavily on the information contained in your financial statements. Depending on the level of assurance required will determine the type of report needed. The services discussed below may only be performed by certified public accountants, which are registered to do so. Such firms are subject to quality review inspections. dbbmckennon, certified public accountants, are registered to perform these services. An Audit provides the highest level of assurance involving gaining an understanding of the internal controls, a critical review of financial analytics, the testing of source documents such as sales orders and disbursements and an independent verification of financial information through third party confirmations. An audit results in an independent opinion from a certified public accountant attesting to the fairness and accuracy of your financial statements and the representations they contain. Audits provide the "highest level of assurance" about the reliability of your financial statements.
A Review is an evaluation of your financial statements through obtaining knowledge of the business and industry, making management inquiries, analytical procedures, and in some cases performing a limited amount of substantial testing. The scope of a review is less than an audit, and thus, the report issued provides "limited assurance" that nothing came to the certified public accountants attention that would require modification. In addition, the financial statements are clearly marked “unaudited”.
A Compilation requires the certified public accountant to obtain an understanding of your business in which your company operates, as well as the basic accounting function and those involved. A compilation is the assembling of financial data from your accounting records and presenting, in the form of financial statements, information that is the representation of management without undertaking to express any assurance on the statements. A compilation provides the assistance needed for you to prepare meaningful financial statements in which the certified public accountant provides no assurance. In addition, the financial statements are clearly marked “unaudited”.
A compilation may be prepared on a basis other than generally accepted accounting principles, such as a cash-basis financial statement. A compilation may include notes to the financial statements or no notes at all. The form of compiled financial statements depends on the requesting party or your particular needs.
Please contact us to assist you in evaluating your financial reporting needs and determining which level of service you require.