Accounting Services – Financial Statement Compilations
In general, financial statements provide historical information regarding the overall health of an entity at a given point in time (balance sheet), the results of activities for the period covered by the statements (income statement), and the sources and uses of cash for the period covered by the statements (statement of cash flows).
Common Users & Reasons for Preparing Financial Statements
- Entity Management/Owners. An entity’s management and/or owners oftentimes cause financial statements to be prepared for their use in evaluating the performance of the entity and its employees.
- Banking Institutions. Bankers and loan officers of financial institutions commonly require an entity provide it with financial statements in order to satisfy conditions of loan agreements (a.k.a., loan covenants). These individuals and/or institutions utilize an entity’s financial information in determining the credit worthiness of borrowers.
- Accountants. In preparing tax projections for business owners, accountants use entity financial statements to estimate taxable income reportable by the business owner.
Level of Assurance Provided by Compilations
It is important to note that financial statement compilations are a service wherein I take information that is provided to me by entity management and present this information in the form of financial statements. Unlike audits and reviews of financial statements, I do not provide any assurance that the compiled financial statements are free from material misstatement. If you require an audit or review of your financial statements, I will be happy to discuss your situation and the requirements for these services.