Compilations, Reviews or Audits

Companies need to prepare complete and accurate financial statements in a timely manner. Performing audits, reviews and compilations is MKA’s primary service to our clients. Companies often need financial statements for its investors, lenders, creditors, or to fulfill regulatory requirements.

Compilation

A compilation report states that no assurance on the financial statement is provided. Generally, a compilation indicates that a CPA has taken information provided by a company and has put the information into financial statements. The accountant’s procedures are very limited for this service. Compiled financial statements may omit required statements and disclosures.

Our report will state that the financial statements have been compiled in accordance with standards issued by the AICPA, that the financial statements have not been audited or reviewed, and that we do not express an opinion or any form of assurance on them.

Review

A review provides less assurance than an audit. Although the financial statements and disclosures are the same as for an audit, the procedures we perform for a review are less in scope.

Procedures commonly performed on a review include the following:

  • Analysis of account balance changes through analytic procedures
  • Ratio computations
  • Inquiries of management

At the completion of the review, our report will state that we have reviewed the financial statements in accordance with standards issued by the American Institute of Certified Public Accountants (AICPA), and that we are not aware of any material modifications that should be made to the financial statements.

Audit

An audit is the highest level of assurance a CPA can provide. We will perform procedures to determine that account balances are fairly stated, and that the company includes in its financial statements all required disclosures. These procedures are tailored specifically to each company, as well as the industry in which the company operates. Procedures commonly performed during an audit include the following:

  • An evaluation of the effectiveness of internal controls
  • Direct confirmation of cash balances, accounts receivable, investment securities, loan amounts and terms
  • Communication with the company’s attorneys
  • Looking at all significant agreements and minutes of the Board of Directors
  • Examining vendor invoices
  • Physical count of inventory
  • Testing of employer contributions
  • Analysis of account balance changes
  • Obtaining written representations from management
At the completion of the audit, the company’s financial statements are prepared, which includes our opinion that the financial statements are presented fairly in accordance with generally accepted accounting principles. We may also issue a management letter with our recommendations for improvements.

 

For additional information: contact us