Accounting and Assurance Services
Auditing (also known as assurance services) is one of the most important and well-known services CPAs provide. Audits are conducted annually for publicly owned companies, privately owned businesses, nonprofit organizations and government agencies and groups. These reports help owners and managers make operating decisions, enable creditors to evaluate loan applications, and help individuals make investment decisions. A CPA may provide a client with three distinct services designed to meet a different need: compilation, review or audit.
Compilation — The CPA assembles financial statements using the client's data but does not provide assurance on the financial statement. Compilations are useful in assisting small, non-public companies. During a compilation, the data is simply arranged into conventional financial statement form. No probing is conducted beneath the surface unless the CPA becomes aware that the data provided is in error or incomplete.
Review — A private company may engage a CPA to perform a review of its financial statements and issue a report that provides limited assurance that material changes to the financial statements are not necessary. With respect to reliability and assurance, a review falls between a compilation, which provides no assurance, and the more extensive assurance of an audit.
Audit — A public or private company may engage a CPA to audit its financial statements. Management is responsible for the content of its financial statements regardless of an
organization's size or form. The audit, provided by the CPA, is a report that provides an opinion on whether the financial statements are presented fairly in conformity with generally accepted accounting principles. An audit is designed to provide the highest level of assurance that the financial statements are free of material errors and fraud.
Internal Controls — Learning how to protect the resources of a company is a key element in running a successful business. CPAs can help business owners understand the importance of organizational controls by evaluating or setting up procedures to reduce the risk of fraud.