Nonprofit Auditing
At just about any nonprofit organization, it's a constant struggle ensuring that their finances are in order. That's why we offer nonprofit auditing services specifically geared toward organizations with time constraints and limited budgets. Our auditing services can be tailored to meet the needs of organizations large and small. With our help, your nonprofit's staffers and volunteers can better focus on serving its community rather than being overburdened by financial issues.
Each first-time nonprofit auditing consultation is free of charge and obligation. We're conveniently located in Concord, NH and easily reachable from Manchester, NH; Loudon, NH; Pembroke, NH; Hooksett, NH; Dunbarton, NH; Weare, NH; and all of southern and central New Hampshire. To learn how we can help you, call us today at (603) 230-2404!
Audit, Review & Compilation: How CPA Reports Differ
Many companies provide their financial statements, along with a CPA’s report, to lenders, investors, suppliers and customers. Informed readers of the report will gain varied levels of comfort based on the type of financial statement provided.
Not all reports are the same. A CPA can provide different levels of service related to a company’s financial statements.
The three general levels of financial statement service are audit, review and compilation. When do you need an audit? Businesses should work with their external auditors to determine what their real needs are so they can decide the right level of service. Is the need for the financial statement a debt covenant requirement? Shareholder use? Regulatory requirement? Performance measurement? Or perhaps compensation calculation?
With a clear understanding of what is needed, the correct decision can be made appropriately without wasting resources.
An audit is the highest level of financial statement service a CPA can provide. The purpose of having an audit is to provide financial statement users with an opinion by the auditor on whether the financial statements are prepared in accordance with the proper financial reporting framework. An audit enhances the degree of confidence that intended users, such as lenders or investors, can place in the financial statements.
The auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement, and whether the misstatements are from error or fraud.
To obtain reasonable assurance, items are observed, tested, confirmed, compared or traced based on the auditor’s judgment of their materiality and risk. After gathering appropriate evidence through this process, the auditor issues an opinion about whether the financial statements are free from material misstatement.
As an additional benefit, the auditor may become aware of some deficiencies in internal control or weaknesses in the organization’s systems and offer suggestions for improvement.A review engagement is conducted to provide limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the financial reporting framework.
A review differs significantly from an audit. Review engagements provide less assurance to the reader of the financial statements because the CPA does not perform many audit procedures.
These analytical procedures provide better understanding of key relationships among certain numbers. This understanding gives more assurance about the reasonableness of the financial condition presented in the financial statements.
Based on the inquiries and analytical procedures, the CPA is able to express only 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. Because a review engagement is substantially less intensive in scope than an audit, the CPA cannot express an opinion on the fairness of the financial statements taken as a whole.In a compilation engagement, the objective is to assist management in presenting financial information in the form of financial statements without undertaking to provide any assurance that there are no material modifications that should be made to the financial statements so they will conform to the acceptable financial reporting framework. Because of the even more limited scope of compilation procedures, the CPA’s report will not express an opinion or provide any assurance regarding the financial statements.
A compilation involves (1) gaining a general understanding of your business, accounting principles used and financial reporting system and (2) presenting financial information in the accepted format of proper financial statements. The CPA expresses no assurance about the accuracy of the financial statements presented. The report attached to the financial statement emphasizes that the service is a compilation.
While independence is required at the other levels of service, the CPA does not have to be independent of your organization to perform a compilation. The report must state that the accountant is not independent.
Further options lie within the compilation level of service. The compilation report may be a full disclosure report with complete footnote explanations of certain amounts and policies contained in the financial statements. Or, these otherwise required disclosures may be omitted. Omission of this information is not permissible under the other levels of service.
It is important to find the proper balance between the cost of the CPA’s services and the level of assurance the users of the financial statements require.
