Fall 2012 issue of Horizons

By understanding the different levels of assurance services offered and what they entail, it will allow you to select the service that is best for your organization as well as understand what is required by your financial statement users. The type of report needed is determined based on many factors, including the size, complexity and needs of the organization, as well as the requirements or needs of the organization’s creditors or investors. Securities laws require all publicly held enterprises to provide annual audited financial statements, while privately held companies may be able to opt for reviewed or compiled statements. Credit agreements with lenders may also dictate the level of assurance required. Compilation A compilation represents the most basic level of service provided with respect to financial statements. A report on the financial statements is issued that states a compilation was performed in accordance with the American Institute of Certified Public Accountants (AICPA) professional standards, but no assurance is expressed that the statements are in conformity with generally accepted accounting principles. This is known as the expression of “no assurance.” Compiled financial statements are often prepared for privately held entities that do not need a higher level of assurance expressed by the accountant. Review A review is more in-depth and requires the accountant to perform inquiries and analytical procedures. A report is issued stating that a review has been performed in accordance with AICPA professional standards, but provides “limited assurance.”

Reviewed financial statements are often prepared for entities that have bank loans, outside investors, or trade creditors, but those third parties do not require audited statements. Audit Audited financial statements are the product of a CPA’s highest level of assurance service. In an audit, the CPA performs verification and substantiation procedures. These verification and substantiation procedures may include direct correspondence with creditors or debtors to verify details of amounts owed, physical inspection of inventories or investment securities, inspection of minutes and contracts and other similar steps. Also, the CPA gains knowledge and understanding of the entity’s system of internal control. When the audit is completed, the CPA’s standard audit report states that an audit was performed in accordance with generally accepted auditing standards and expresses an opinion that the financial statements present fairly the entity’s financial position and results of operations. This is known as the expression of “positive assurance.”

RubinBrown Business Performance Analysis (BPA) Report Rebranded One of the most valuable resources provided to RubinBrown clients is our renowned Business Performance Analysis (BPA) report. This report, which has been renamed ViewPoints, provides a unique, value-added approach to our audit services. The new ViewPoints report focuses on understanding all aspects of your organization and enables us to evaluate the overall effectiveness of your organization. ViewPoints also provides a summary of your strengths and opportunities for improvement, as well as analyses to provide financial knowledge to assist you in managing your business. Let us know what you think about our ViewPoints report!

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