Stockholders, creditors, and private investors often need assurance that your financial statements accurately represent the true position of your company. McCarthy & Company goes beyond your reporting requirements by also providing proactive advice and guidance on the financial health of your business, as well as its strategic direction.
Your stockholders, creditors, or private investors have different levels of risk tolerance, so we provide three levels of assurance to meet your needs.
Audit - Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical and objective examination of your financial statements, including the verification of specific information as determined by the auditor or as established by general practice.
Our work includes evaluating your internal controls, testing of selected transactions, and communicating with third parties. Based on our findings, we issue a report on whether your financial statements are fairly stated and free of material misstatements.
An audit allows you to:
All public companies are required to have an annual audit, but some nonpublic entities must undergo an annual audit as well. These include local governments, not-for-profit agencies and other organizations receiving government grants.
Moreover, some financial institutions require audits of nonpublic companies based on the financing amount and/or the bank's assessment of the company's risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may need to be audited.
Review - Limited Assurance
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company's management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.
A review doesn't require us to study and evaluate your company's internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: "We are not aware of any material modifications" for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.
A review provides the advantages of a CPA's technical expertise without the work and expense of an audit.
Compilation - Lowest Level of Assurance
In compiling your financial statements, we present information that is the "representation of management" and expresses no opinion or assurance on the statements. Compilations do not require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent CPA as part of their lending covenants.
Which report is right for your business?
Each type of financial statement report may suit specific circumstances, depending on requirements of your bank or other parties, as well as budgetary needs.
Understanding each report's unique strengths and weaknesses can help you choose the most appropriate one. Please call us at 732.341.3893 if you have questions about which type of report is right for you.
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