Financial Audits Vs Financial Reviews

Audit

A complete financial audit offers the highest level of assurance available. During an audit, we take a magnifying glass to your financial records to ensure they do not contain any material misstatements. We provide an independent, objective analysis as to whether your financial statements are prepared in accordance with generally accepted accounting frameworks, such as International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP).

During an audit, we gain an understanding of your internal control and access control risks. At its conclusion, we create and extend an opinion on your financial processes, risks, and controls as a whole, including identification of your areas of weakness. While it is impossible for anyone to obtain absolute assurance, a complete financial audit offers the highest level of assurance available and will typically be required of you during serious financial activities, such as a major outside investment or the sale of your company.

As per AICPA guidelines, during an audit we will:

• Gather an understanding of your internal controls
• Assess your fraud risks
• Perform inquiry and analytical procedures
• Perform verification and substantiation procedures
• Issue a formal report on your financial statement’s validity
• Express an opinion on whether your financial statements are presented fairly and in accordance with applicable financial reporting frameworks

Review

A financial review is the base level of assurance services. While a financial review does not include the full scope of a financial audit, it does offer limited assurance that your financial statements do not contain any material misstatements. During a review, we provide a conclusion as to whether your financial statements are valid and credible, but do not offer an opinion regarding your financial processes, risks, and controls. Financial reviews are typically required as you start to seek larger and more complex levels of financing and credit.

As per AICPA guidelines, during a review we will:

• Perform inquiry and analytical procedures
• Issue a formal report on your financial statement’s validity

How Audits & Reviews Affect Your Bottom Line

As your business grows, financial reviews and audits will be a necessary step in gaining the confidence of creditors, lenders, and stakeholders. During both a financial audit and a financial review, the CPA providing the assurance must be independent from your organization, so it is important to start building a relationship now with a CPA that you can trust for these services.

Outside of the necessity during large financial transactions, many companies elect to conduct regular audits to ensure their financial practices are up to standard, particularly if they have been preparing financial statements in house. As a business owner, you live and die by your financial standing, so it’s wise to regularly have an independent, objective, outside point-of-view to make sure you are tracking an accurate bottom line.

If you have recently been asked for financial assurance from a third-party agency. Or if you want an outside opinion on your financial statement’s validity, we are here to help. Get in touch with us today.