CPA services such as reviewed financial statements and compilations have gained popularity in recent years. A contractor may require a CPA-prepared accounting review for their annual bonding insurance application. Or a bank may require a compiled set of financials to better understand a commercial customer’s financial condition. Either way, Virtual Accounting & Tax can help businesses with these financial reporting needs which require a CPA’s signature.
Reviewed Financial Statements
Reviewed financial statements provide the user with comfort that, based on the accountant’s review, the accountant is not aware of any material modifications that should be made to the financial statements for the statements to be in conformity with the applicable financial reporting framework (GAAP or other). A review engagement involves the CPA performing procedures (primarily analytical procedures and inquiries) that will provide a reasonable basis for obtaining limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the applicable financial reporting framework.
In a sense, an accounting review is designed to make sure the financials “make sense” so that third parties may rely on them. A review does not contemplate obtaining an understanding of the entity’s internal control; assessing fraud risk; testing accounting records; or other procedures ordinarily performed in an audit.
Virtual Accounting & Tax will compile financial statements from client information in accordance with professional standards. No opinion is expressed in a compilation about the underlying financial information.
Agreed-upon procedures is when a CPA is engaged by a client to issue a report of findings based on specific procedures performed on certain transactions or financial areas. You, as the client, engage us to perform very specific procedures which you have outlined and developed. These may be needed to assist the client in evaluating these certain transactions or financial areas as a result of a need or concerns, or as stipulated by outside parties.
An agreed-upon procedure is a standard a company or client outlines when it hires an external party to perform an audit on a specific test or business process. The procedures, which are called audit standards, are designed and agreed upon by the entity conducting the audit, as well as any appropriate third parties.
Because the needs for the specific procedures vary widely, the nature, timing, and extent of the agreed-upon procedures will vary. In this type of report, you, as the client, assume responsibility for the sufficiency of the procedures since you best understand your own needs. In an agreed-upon procedures engagement, a CPA does not perform an examination or a review, and do not provide an opinion or negative assurance.