Audits are usually performed because an outside third party requires an auditor’s opinion on the financial statements. Audits are performed to express an opinion about whether the financial statements are fairly presented and that they conform with generally accepted accounting principles or another financial reporting framework.
Audits are the most comprehensive of all the attest services. Auditing procedures include testing accounting records and examining evidence supporting the amounts and disclosures in the financial statements. Evidence is obtained through inquiries, analytical procedures, physical inspection, observation, and independent confirmation. Additionally, audits require an understanding of the entity and its internal controls.
There are certain assurances that audits are not designed to provide. An audit does not assure on or aim to identify deficiencies in internal control. The work performed as part of an audit gives us an understanding of your company and financial reporting function. This means we may be able to identify issues related to internal controls, processes, inefficiencies, and cash flows problems, as well as company and industry trends. As a result, the work performed during an audit may allow us to provide you with general business advice based on the insights gained during the engagement.
Reviews are usually performed to satisfy third parties that want to be assured that the financial statements are not materially misstated. They provide a lesser degree of assurance to financial statement users than an audit. Also, unlike an audit, there is no expression of an opinion on the financial statements, testing of controls, or financial data. Reviews essentially consist of inquiries of company personnel and analytical procedures applied to financial data.
Compilations provide the lowest level of assurance of the financial statements services. They are often required by outside third parties as well as internally by companies.
In a compilation, we assist management in presenting their financial information as financial statements in the proper form. Compilations also require us to understand the client’s industry and obtain specific knowledge about the client. Additionally, we read the financial statements and ensure they are free from obvious material errors. They provide no expression of an opinion on the financial statements.
Agreed-upon procedures are performed when the parties involved concur that they want the accountant to perform a specific procedure or set of procedures. They can be useful when you or a third party wants some comfort about a specific area such as inventory or cash but do not need the assurance and related time and expense of a full audit or review.
Agreed-upon procedures can deal with various subject matters, such as the quality of collateral or due diligence related to a business acquisition. In all cases, agreed-upon procedures are solely the parties' responsibility who specify them, and they never provide an opinion on the subject matter or financial statements.
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Audit Review Compilation Miami FL
