Diane B. Rohde CPA PLLC
Financial Statement Preparation, Compilation, Review
Every year many businesses need to have preparation, compilation, review or financial statement audits. If you’re one of them it can seem like a confusing situation. Especially when you don’t know where to go. That’s where we come in. At Diane B. Rohde CPA PLLC we have reviewed, compiled, and prepared financials for a variety of businesses and business types.
Having financial statements evaluated according to generally accepted accounting principles (GAAP) is a complex area of accounting. We handle these jobs with a level of accuracy not found very often in business. Contact us today for a free quote on your financial statement needs.
Financial Statement Preparation
Most preparation of financials takes place at the end of the month, quarter, or year. Quite often this service is a function of your accounting department or bookkeeper. However, some businesses want a level of analysis provided with their financial statement preparation. In these cases, they turn to a CPA for the additional evaluation and breakdown.
Horizontal or vertical analysis can be part of a financial statement preparation. Also, ratio interpretation and comparative periods can be presented. All of these items help a business evaluate its current position and make changes going forward. Nothing says potential failure more than a business that doesn’t periodically assess its financial position.
Financial Statement Compilation
Compiled financial statements are designed to provide a more information validation than a preparation. Generally, a preparation assignment is done for internal management. But when you jump to a compilation, the use often is for external reporting purposes. Such as information being provided to a bank, creditor or as proof of finances for a loan.
In a compilation the accountant read the financials to determine whether they appear appropriate. As you can see, now there is some rationale to the process and not just simply pulling numbers and ratios together. A compilation doesn’t provide assurance. However, it does allow for greater faith in the information presented because the accountant must consider the data and not just report it.
Financial Statement Review
The last of the three services we offer for financials is a review. A review provides limited assurance that your financial statements comply with GAAP in material respects. This doesn’t mean absolute or reasonable assurance. It is simply a measure that the accountant has taken steps to become acquainted with the data.
The process of a financial statement review includes ratio analysis and other measures. They allow the accountant to state that there is limited assurance that the statements comply with GAAP in material aspects. This does not provide that the accountant uncover fraud. Fraud is something that would be unlikely to be found during a review, due to the nature of the act. A review is less intrusive than an audit of financial statements and less costly.