CPA Services: Audits, Reviews and CompilationsDuluth CPA Advises Atlanta/Gwinnett Business Owners: Understanding Your Business Financial Statements

There are three levels of attestation services a CPA may provide when evaluating your business’s internal financial statements.  As a Duluth CPA we have helped many Gwinnett/Atlanta business owners avoid the unnecessary expense of an audit or a review when their Gwinnett bank/lender is frequently well satisfied with a compilation, the internal financial data of the company and a copy of the corporate income tax return.

An informed understanding of each of the three substantially varying levels of service an outside CPA may provide will assist you in knowing which is best suited to your particular needs.  Several examples of the varying degrees of need will be noted in each of the levels described. 

Generally speaking, you should seek out the reporting standard that meets the needs of management, investors, bankers, owner, the SEC, and other regulatory governing agencies.  Although there is some discretion in the specific application of rules, guidelines, FASB’s (Financial Accounting Standards Board) pronouncement and other governing rulings, much of what a CPA is required to do for the varying levels of service are indeed mandated by the AICPA (American Institute of CPA’s). 

The standardization of procedures and reporting is largely intended to give the public at large standards by which CPA’s are to govern their personal as well as professional ethics and standards in both the completion of attestation services and their reporting.


Auditing services are the highest level of independent CPA services available.  As such, there are more FASB’s and SAS’s (Statements on Auditing Standards) written about audits than any of the other levels of service available.  Some of the procedures required by an outside CPA in an audit environment include confirmation of bank balances, review and verification of bank reconciliation, a search for deposits in transit, a search for any unrecorded outstanding checks, confirmation with the bank of any offsetting balance requirements, lines of credit, security, debt covenants and their compliance, verification of recording of checks, receipts and an assessment of internal control.  The successful completion will require verifying all substantive balance sheet and profit and loss items, obtaining a letter of representation from the client’s attorney, being present and performing substantive verification procedures of inventory, notes payable, Board of Directors minutes and much, much more.

In layman’s terms, the purpose of an audit is to independently verify by sight, confirmation, discussion with management, assessment of internal controls and analytical procedures, that a company’s financial reports are substantively correct.  Audited financial statements will also include a statement of changes in financial and detailed and referenced footnotes detailing the companies accounting methods, policies, and certain financial data.  Again, both the statement of cash flows and the attached footnotes and the procedures and reporting thereon are governed by the AICPA, SAS’s, and other governing and regulatory agencies.

Audits, by nature of the work performed, as well as the reporting standards required, are substantially more expensive than any of the other levels of service available.  Publicly traded/SEC companies are examples of companies required to have an annual audit.  It would be prudent also to consider having an annual audit performed when someone other than the owner performs key areas of control and exposure.


A review consist predominantly of an assessment of the company’s books and records by the performance of analytical tests, certain analytical procedures (such as the comparison to prior books and records), and calculation of certain financial tests and ratios.  There procedures, by their very nature are intended to give reasonable assurance to an outside reviewer, rather than the detailed verification and reporting requirements required by an audit.  Reviews are frequently requested by banks or insurance companies issuing performance bonds who want a higher degree of service/verification than a compilation, which is discussed next, but not the full extent and cost of an audit.

Reviews typically also include a statement of changes in financial position as well as detailed footnotes.


The lowest level of attestation services a CPA may provide is a compilation.  Essentially, a compilation is when a CPA simply compiles the books and records of a client without the performance of any substantive procedures, independent verification or confirmation of any of a clients balance.  Thus, a compilation is solely the representation of a company’s management as no verification or procedures of account balances on the balance sheet or the profit and loss statement are required.  Also, management has the option to also exclude from compiled statements the statement of changes in financial positions and all related footnotes.

At HIS CPA, P.C. we strive to be an integral part of your management team.  By keeping you better informed of your options and tax laws that affect you and your business, we remain poised to assist you as you work to successfully manage your business.

HisCPA PC (A Christian CPA Firm) Offers Free Initial Consultations/Interviews offering:

  • Atlanta Bookkeeping Services
  • Atlanta Financial Statements
  • Atlanta Tax Problems
  • Atlanta Tax Preparation for Business Owners & Personal Income Tax Returns

Contact HIS CPA PC (A Christian CPA Firm) today.