Financial Statement Firm in Texas
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Financial Statement Preparation
Preparation of financial statements is perhaps the easiest way to present financial information prepared by management. The books and records of the Company are used to prepare a financial statement for management and lender requirements.
Preparer (CPA) assembles the information and presents that financial information in a typical financial statement format. The Preparation is significantly less than a Compilation or Review.
We are not required to perform any procedures that would verify the information supplied by management. Another major difference is that there is no Accountant’s report prepared with the financial statements.
Financial Statement Compilation
In a Compilation, the preparer applies accounting and financial reporting expertise to assist management in the preparation of financial statements. There is no requirement to verify the accuracy or completeness of the information provided by management or otherwise gather evidence to express an opinion or a conclusion on the financial statements.
We prepare a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We do not audit or review the financial statements for this type of service.
There is a compilation report with the compiled financial statements indicating the level of service provided but we do not express an opinion, a conclusion, nor provide assurance on these financial statements. The main benefit over a “Preparation” is that we are required to follow the more stringent standards set forth for our profession.
Financial Statement Review
In a Review, the objective is to obtain “limited assurance” to determine whether we are aware of any material modifications that should be made to the financial statements to be in accordance with the applicable financial reporting framework.
A review includes primarily applying analytical procedures to management’s financial data and making inquiries of Company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole.
A review requires more than a preparation or compilation but is substantially less in scope than an audit. Since audits can be much more expensive and take longer than a review, lenders are sometimes more willing to accept Reviewed Financial statements instead of an audit.
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