Financial Statements

Audits – This is the highest level of assurance a CPA can provide. Many organizations require financial statements audits by independent auditors for various reasons. They could be used to obtain a loan or to present to a potential investor. They may be required by an external agency or required by the bylaws. Audits involve obtaining evidence through inquiry and inspection, testing of internal controls, and substantive testing procedures.

Reviews – This service is performed by independent accountants and provides limited assurance of an organization’s financial statements. They primarily involve obtaining evidence through inquiries and analytical procedures.

Compilations – This service provides no opinion or assurance on an organization’s financial statements. An organization’s financial data will be obtained and converted into financial statements accompanied with a letter from the CPA. This service does not require independence.

Preparations – This service involves preparing financial statements based on financial data and does not come with a letter from the CPA. No assurance is provided in this engagement.

Prospective Financials

Prospective financial statements include projections and forecasts. They reflect expected financial position, operating results, and cash flows, based on certain assumptions and conditions. They may be needed for a number of reasons. They could be used for bank financing, potential investors, or just mainly for internal management decisions. The compilation service will be performed for this engagement.

Budgets

A budget is a guide that can help an organization plan for the future as well as assess its current financial health. Budgets are periodically reviewed and compared to the actual results of operations and cash flows for an organization to determine if it’s reaching its goal as predicted. They are prepared normally before the beginning of a fiscal year and presented to a board of directors for approval. A CPA can help prepare this for an organization.

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