Company financial requirements vary. Based on what funding or financing options you need, may determine the type of financial statement audit, review or compilation you need. Many times this is dictated by your bank or financing institution. To help you decipher the language, below are the differences in each type of financial statement evaluation performed by CPA firms:
As a general rule, audits are required when third-parties require a high confidence level that your company financial statements fairly represent your current financial condition and operating results. In an audit, the MMB team will assess internal controls, evaluate fraud risk, review electronic and physical records, conduct inquiries and test specific transactions.
A review is a more limited engagement where the MMB team conducts analytical procedures and sequesters management to provide limited assurance regarding the material accuracy of financial statements.
A compilation is the most basic option, where the MMB team helps management present financial statements without specific assurances about any need for modifications.