Anyone owning a business needs to know how to evaluate not only where the money went, but where it is now, and where it is going in both the near and long term. A company’s Financial Statements provide various financial information that management, investors, and creditors use to evaluate a company’s financial performance. Each Financial Statement serves a different purpose and tells a different story. Together they can be used to analyze cash flow, profitability, and the overall health of the business.
The difference between a Compiled Financial Statement and a Reviewed Financial Statement is that the Compiled Statement does not require independence, nor does it provide any assurances on the accuracy of the financial statements. A Reviewed Financial Statement requires the Certified Public Accountant’s Independence, provides limited assurances on the Financial Statements, and requires additional inquiries of management, as well as analytical procedures to be applied to the Financial Statements in order to provide limited assurances. Both types of statements are the Representation of Management.
For example, a surety company may require a higher level of Financial Statements, (Reviewed verses Compiled) in order to underwrite bonding for construction contracts or government contract requirements. In addition, banks or other lending companies may require reviewed Financial Statements in order to develop confidence in their lending and to help to identify the potential risk exposure of growing companies.
At Sela CPAs Financial Group, we prepare Compiled and Reviewed Financial Statements to meet the needs of owners, management, investors, creditors and other interested third parties. Our firm takes a pro-active approach in helping our clients understand their financial statement needs, in order to better prepare them to issue the statements if and when the need should arise. Call us today to get your Financial Statements in order and be prepared for that next big opportunity.
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