Auditing and Accounting Services

COMMERCIAL AND PROFESSIONAL ORGANIZATIONS

NOT FOR PROFIT ORGANIZATIONS

AUDITING AND ACCOUNTING LINKS

COMMERCIAL AND PROFESSIONAL ORGANIZATIONS

FINANCIAL STATEMENTS

We offer three levels of service on the financial statements that we prepare: Audit, Review or Compilation. The nature of each service and the level of assurance are described below. All work is performed in accordance with standards established by the American Institute of Certified Public Accountants.

Audit

An audit provides the highest level of assurance on the financial statements. Our work includes a review of internal controls, testing of selected transactions and communication with third parties such as customers, vendors, banks and your attorney. The accountants report will state that "in our opinion, the financial statements are fairly stated in accordance with the method of accounting used by the company.." Fairly stated implies that the statements are free of material misstatements. It would be cost prohibitive to perform sufficient testing to state that the statements are error free.

Review

A review provides a lower level of assurance than an audit. Our work consists of discussions with management and analytical procedures applied to financial data. The accountants report provides limited assurance. It states that an audit was not performed and that we are not issuing an audit opinion but it goes on to say that nothing came to our attention to lead us to believe that the statements had material misstatements.

Compilation

A compilation provides the lowest level of assurance. Our work consists of preparing statements from information provided by the company. The accountants report states that we have not performed an audit or review and that no assurance is being provided.

Summary

Each level of service provides a full set of financial statements including the footnotes required. There is an option to omit the footnotes when using a compilation.

CHOOSING A LEVEL OF SERVICE

Which level of service should you choose?

The higher the level of assurance, the more time (i.e. cost) required. Therefore you should choose the lowest assurance that meets your needs.

A compilation is generally sufficient where management is involved in the day to day operations of the business and the statements are not distributed outside the company. The statement can be used for distribution outside the company if the level of assurance meets the outsider's needs.

A review should meet the needs of most companies. The limited assurance provided is generally sufficient for both management and outside users such as banks or other credit suppliers. This level of service represents a reasonable compromise between the higher cost of an audit and the lack of assurance provided in a compilation.

An audit is appropriate when management wants the highest level of assurance or an outsider has requested that level of assurance.

We have found that outside users of financial statements, particularly banks, will often request an audit when a lower level of assurance will meet their needs. We have found that many users will accept the lower level of service if the request is made. We will assist you in choosing the level of service that is best for your needs.

FREQUENTLY ASKED QUESTIONS

• Do I have to prepare a financial statement? A financial statement is not a requirement. However most businesses find them useful. Even if you have not had an outsider request a statement, you may in the future.

• Can I change the level of service performed? You may change the level of service each year if you like. If you switch to an audit we must perform certain work on information from the prior year in addition to work for the current year.

• Can I prepare my own statement? You can prepare your own statements as often as you need them. Most software packages that are used to perform your bookkeeping or accounting will prepare a statement. Such a statement will not include any adjustments that we might find during our work but should provide useful information for management. We can assist you in selecting and implementing software for this purpose.

NOT FOR PROFIT ORGANIZATIONS

We have extensive experience serving the Not for Profit community. Not for profit entities have many of the same needs as the for profit world but have other needs too. We offer a full range of services to meet those needs.

In addition to standard financial statements and the related accountants reports, not for profit entities often have additional reporting and audit requirements. These requirements are often imposed by funding sources.

Entities that receive funding from the Federal Government ( and certain other governmental entities) are required to have an expanded audit under Government Auditing Standards and OMB Circular A-133. Accountants must meet additional requirements in order to perform these audit. Our firm meets these qualifications and we have performed many of these audits.

FREQUENTLY ASKED QUESTIONS

• Does my organization need an audit under government auditing standards? An audit is required if the organization receives at least $300,000 in Federal funds during a fiscal year. This threshold was just increased from $25,000.

• What other requirements are there? Any organization that solicits contributions in Pennsylvania must register with the Pennsylvania Charitable Commission. This registration must include a financial statement that has been audited, reviewed or compiled by a CPA. The level of service depends on the amount of contributions received. A financial statement is required when $25,000 or more is received.

Links to General Financial News and Information on the Web

THOMAS: Legislative Information on the Internet

THOMAS provides access to the latest U.S.legislative information. THOMAS contains a wealth of information on what's going on in Washington from Congressional activities to the Congressional Record to historical documents.

CNN Financial Network

For the latest breaking news on the Financial world CNNfn is the place to go - hot stories, markets, stock quotes, and much more.

 

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Copyright © 1996 Buckler, McKenney & Nadzadi CPA