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Eleanor Bye Certified General Accountant
There are several different types of Financial Reporting available for your organization (also known by accountants as an Engagement). Each Engagement provides a different level of assurance about the accuracy of the financial statements being presented. We are capable of doing any of type of Engagement that you may need including Compilation Engagements, Review Engagements, and Trust Audits. Talk to us about your needs and we will recommend the appropriate type of Financial Reporting for your organization's situation.
A Compilation Engagement (also known as Notice to Reader Statements) is where the accountant will prepare the financial statements. These will include a Balance Sheet, Statement of Operations and Statement of Retained Earnings. This requires the accountant to work with management to gather the financial data and ensure that the statements are mathematically correct. The accountant will make sure that the statements are not false or misleading based on the data provided by management. The accountant will include a Notice to Reader that the accountant hasn't verified the accuracy of the information provided by the company's management.
This type of Engagement is typically used by privately held companies with simple ownership structures. These statements are used by management as a planning tool, and a Compilation Engagement is often the minimum requirement of lenders to obtain/maintain loans.
An Assurance Engagement is where the accountant will express a conclusion about the financial statements being presented. This is usually done in the form of a report where the accountant identifies the purpose of the Engagement, identifies management's assertions, identifies the criterion and standards used in the statements, and a conclusion is made about the level of assurance in the statements. The statements will include a Balance Sheet, Statement of Operations, Statement of Retained Earnings, Cash Flow Statement and Notes to the Financial Statements. A
Review offers a plausible level of assurance but it does not offer any guarantees. Review Engagements offer more assurance than a Compilation (Notice to Reader), but less than an audit.
A Review Engagement is normally used where one party (management) is responsible to another party (the user) either through statutory obligations or by voluntarily choosing to report on information. This type of Engagement may be used for companies that have arms length ownership, for non profit organizations, organizations/companies that deal with government, or as a tool to secure financing.
The objective of an audit of financial statements is to express an opinion regarding whether the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in accordance with Generally Accepted Accounting Principles (GAAP) or some other disclosed basis of accounting. The accountant will work with management to ascertain that good accounting procedures are in place and to verify the accuracy of the financial data being presented.
Audits are usually used by public entities such as public corporations, not for profits, and public agencies to verify the financial information being presented by management to stakeholders. Trust Audits are also completed when money is being held in trust on behalf of an organization or individual(s). Sometimes a Trust Audit is completed for a private company in situations where the owners/financiers need to establish the accuracy of management's financial procedures and information.
The accountant will report on financial information and procedures for the stakeholders of the Charity. Depending on the applicable legislation and bylaws of the organization a Compilation, Review Engagement, or Trust Audit may be completed as part of that process. The accountant may need to come to the Annual Meeting to explain the report.
Category: Financial statements