WE SPEAK THE LANGUAGE...
...of Audits, Reviews,
and Compilations
Types of financial statements...
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 report
- Review report
- Compilation report
The type of report is determined by mutual agreement between the
client 
and the CPA. This determination usually depends on many factors, such
as the needs of the client, needs of creditors or investors, the size and
complexity of the business, and other factors. All publicly-held enterprises
are required by securities laws to provide annual audited financial statements,
while privately-held companies often opt for reviewed or compiled statements.
Or, credit agreements with lenders may require audited statements, even for
private companies.
Regardless of the level of service performed by the CPA, the financial
statements are the primary responsibility of the reporting entity.
We are experienced in performing audits, reviews, and compilations
for entities of all kinds and sizes. This experience can be placed
at your disposal.
Bateman & Co., Inc., P.C. and its affiliated firms in the International
Association of Practising Accountants have teamed together to provide
accounting and auditing services to companies and individuals all around
the world.
A comparison...
Compiled financial statements 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 with the client as to the services
to be provided, and reading the financial statements to determine whether
there are any obvious departures from generally accepted accounting principles
(or, in some cases, another comprehensive basis of accounting used by the
entity). It may be necessary for the CPA to perform "other accounting
services" - such as creating your general ledger, or assisting you with adjusting
entries for your books - before the financial statements can be prepared.
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. This is known as the expression
of "no assurance." Compiled financial statements are often prepared
for privately-held entities that do not need a higher level of assurance
expressed by the CPA.
Reviewed statements require that the CPA perform inquiry and analytical
procedures in addition to the procedures described above for a compilation.
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, or if applicable, another
comprehensive basis of accounting. This is known as the expression of
"limited assurance." 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.
Audited financial statements are the product of a CPA's highest
level of assurance services. In an audit, the CPA performs all of the
steps indicated above regarding compiled or reviewed statements, but also
performs verification and substantiation procedures. 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 a knowledge and understanding of
the entity's system of internal control. 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 fiancial statements present fairly the entity's financial position and
results of operations. This is known as the expression of "positive
assurance."
Cost comparisons...
As might be expected, compilations are the least expensive service,
with reviews being more, and audits being the most expensive service.
It is impossible to state costs with certainty, but as a general rule of
thumb, a review can be expected to cost about 30% more than a compilation,
and an audit can be expected to cost about 30-40% more than a review.
Most firms charge for these services based on time expended, and obviously
more time is expended as the level of service rises.
We will discuss with you fully all costs for accounting and auditing
engagements, including the pros and cons of each level of service, and will
assist you in choosing the level of assurance for your financial statements
that is appropriate for you.
Who we are...
Bateman & Co., Inc., P.C. may be the
biggest small firm you’ll ever find…big in ideas, and big in vision.
Big in quality of work product and quality of client service. And yet
we’re small enough to have a close relationship with clients.
IAPA members are independent accounting firms located in more than
200 cities around the world, including about 20 members in principal cities
of the U.S. Each member firm is a leader in its geographic area, and
was admitted after a rigorous investigation. Founded in 1979, the organization
has experts in every conceivable field, and its members meet regularly to
exchange ideas and develop personal relationships - all designed for your
benefit.
At Bateman & Co., we work hard at maintaining relationships
with our IAPA colleagues around the world. This means we can pick up
the telephone to provide an introduction for you with a colleague overseas
at a moment’s notice. That’s a big plus for you!
We were established in 1967, and our record of service has built
for us a reputation as one of THE quality firms in Texas.
We serve public and privately-owned companies, Americans living
overseas, foreign persons and companies residing in and doing business in
the U.S., high income individuals, partnerships, trusts, estates, and non-profit
organizations.
Our philosophy...
We want to perform the highest quality professional services available
for a reasonable fee. In doing so, we will conform to the high professional
standards imposed by the profession in which we practice.
That’s not easy. It takes a stringent system of quality control,
and highly qualified and motivated people. It demands dedication
and hard work. It means no cutting corners.
At Bateman & Co., Inc., P.C., we feel a strong sense of duty
to our clients - and ourselves - to be true to those lofty principles.
We speak the language!
For more information, please
contact Clinton F. Bateman.
Bateman & Co., Inc., P.C.
Certified Public Accountants
A Member Firm Of
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