Audits & Financial Statements

At RCK, CPA, we have helped many clients with preparing financial statements and audit services (in particular, working with many local co-ops and condominiums).  When CPAs prepare or assist in preparing financial statements, they are required under professional standards to issue a report on those financial statements. This report can be one of three types: audit, review or compilation.

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The type of report is determined by mutual agreement between the client and CPA, and it usually depends on many factors, such as the needs of the client, needs of creditors or funding sources, and the size and complexity of the organization.

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RCK CPAs is one the leading provider of audits and financial statements within the tri-state regions of Queens, Brooklyn, Manhattan, the Bronx, Staten Island, Nassau and Suffolk counties.

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Financial Statement Compilation

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These represent the most basic level of service CPAs provide with respect to financial statements. In a compilation, the CPA must comply with certain basic requirements of professional standards, such as having a knowledge of the client’s industry and applicable accounting principles, having a clear understanding of the services to be provided, and reading the financial statements to determine whether there are any obvious departures from generally accepted accounting principles.

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Upon completion, a report on the financial statements is issued that states a compilation was performed in accordance with AICPA professional standards, but no assurance is expressed that the statements are in conformity with generally accepted accounting principles. Compiled financial statements are often prepared for privately-held entities that do not need a higher level of assurance expressed by the CPA.

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Financial Statement Review

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These require that the CPA perform inquiry and analytical procedures in addition to the procedures described above for a compilation.

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Upon completion, a report is issued stating that a review has been performed in accordance with AICPA professional standards, that a review is less in scope than an audit, and that the CPA did not become aware of any material modifications that should be made in order for the statements to be in conformity with generally accepted accounting principles.  Reviewed financial statements are often prepared for entities that have bank loans, outside investors, or trade creditors, but those third-parties do not require audited statements.

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Financial Statement Audit

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These are the product of a CPAs highest level of assurance services. In an audit, the CPA performs all of the steps indicated above and also performs verification and substantiation procedures.

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These verification and substantiation procedures may include direct correspondence with creditors or debtors to verify details of amounts owed, physical inspection of inventories or investment securities, inspection of minutes and contracts, and other similar steps. Also, the CPA gains an understanding of the entity’s system of internal control.

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When the audit is completed, the CPA’s standard audit report states that an audit was performed in accordance with generally accepted auditing standards, and expresses an opinion that the financial statements fairly present the entity’s financial position and results of operations.