Three Levels Of Financial Statement Services
Audits
An audit is the highest level of assurance for a business's financial statements. This additional assurance comes from reviewing financial documents to ensure that the statements are free of any misstatements or misrepresentations and are fairly presented based upon commonly accepted accounting principles.
An audit will help you do the following:
- Verify selected transactions by examining documents
- Detect material fraud and error
- Evaluate the internal control system of your organization
- Physical Inspections and observations
Reviews
A review provides limited assurance of a business's financial statements. This process is not as involved as the audit process. Reviews offer a more high-level overview and examination to see that the financial statements "make sense." This review of analytical procedures ensures that the statements and documents conform to generally accepted accounting principles.
Compilations
A compilation provides no assurance of a business's financial statements. This process involves compiling financial statements for a business and puts them in a format that conforms to generally accepted accounting principles. There is no testing or analytical reviews done during a compilation process.