Financial Statement Audits
The ultimate purpose of a financial statement audit is to provide independent assurance that the entity’s financial statements are presented fairly according to U.S. Generally Accepted Accounting Principles. An audit provides the highest level of assurance on a financial statement, and therefore includes extensive procedures in performing an audit.
During an audit, our team will obtain an understanding of the entity and its environment, assess internal control, and design procedures sufficient to test the appropriateness of the entity’s accounting procedures and underlying accounting records. Some of these procedures may include: observing certain assets including inventory and fixed assets, searching for unrecorded liabilities, verifying transactions with third parties, applying analytical procedures to identify unusual items, and testing significant transactions by examining supporting documentation.
An audit may be appropriate when the entity needs to provide a high level of assurance to a lender, investor, or other outside third party. This type of service may be especially fitting when preparing to sell or merge with another business, seeking complex financing, or when joining an organization which specifically requires this level of service.
Often times, a parent company or a board member suggests your organization may need an audit. It is important to have a conversation about why an audit might be needed, and whether a similar but less extensive service such as a Review, or Agreed Upon Procedures engagement may be suitable.
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