Compilations with Disclosures
Unlike reviews or audits, compilation reports do not include an opinion about the fairness of the financials, so they are not appropriate for all financing situations. That being said, compilations with disclosures can sometimes be an acceptable alternative to more costly review or audit reports. When engaged to compile financial statements with the required disclosures, narrative descriptions of the accounting procedures employed by the company are attached to the financial reports. The CPA does not, however, most costly analytic or sampling procedures and is permitted to help management with bookkeeping, as they are not required to maintain independence during a compilation engagement.
Make an Impression
As a business’s accounting procedures become more complex it helps present compilations with disclosures to clarify information included in your financial statements. Compilations with disclosures clarify your financial performance and the inclusion of the disclosures can often be enough to dissuade lenders from requiring a company to bear the expense of paying for an audit or review.
Even when a review or audit is required, it is often better to present the auditor with a full disclosure financial statements. It is unwise for management to rely entirely on the audit firm’s judgement about how the required disclosures need to be presented. There is often some flexibility available in the format in which the disclosures are presented and businesses in highly competitive environments may wish to minimize the information that is shared with the public. Working with your CPA to determine the form of the disclosures provides you with the opportunity to determine the best way to present the required information.
Your management can work with our firm to prepare and present the compilations with disclosures and we can advocate your position during the audit process.
Call us to find out more about how we can help you put your best foot forward with potential lenders and investors.
When you approach a potential investor or creditor with full disclosure statements it demonstrates a high level of professionalism. This reflects positively on management's integrity and puts your business in play.