Traditionally, stockholders, creditors, and private investors often need assurance that financial statements accurately represent the true financial position of a company. However, in today’s highly competitive market an audit represents much more. An audit gives us and our client the opportunity to explore and improve upon the level of performance while saving or reallocating resources as needed.
However, companies may have assurance needs that do not require an audit of financial statements. For these purposes we offer three different attest services in addition to audits.
Our auditing services are tailored to each client’s specific need in order to provide the highest level of assurance.
An audit is a methodical objective examination of your financial statements. It includes, but is not limited to, the verification of specific information as determined by the auditor or as established by the general practice.
Our work includes a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements and in conformity with U.S. Generally Accepted Accounting Principles (GAAP).
In Puerto Rico, all companies with gross revenues exceeding $3 Million are required by law to present Audited Financial Statements with their tax returns. In addition, there are some cases in which entities that do not exceed the threshold could benefit from an audit as well. An Audit allows you to satisfy stakeholders such as government agencies, banks, employees, customers, suppliers and pressure groups, as well as the investing community, as to the credibility of published information.
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company’s management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.
A review doesn’t require us to study and evaluate your company’s internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: “We are not aware of any material modifications” for the financial statements to be in conformity with GAAP. Reviewed financial statements must include all required footnotes and other disclosures.
Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA’s technical expertise without the work and cost of an audit.
In compiling financial statements for a client, we present information that is the “representation of management” and we express no opinion or assurance on the statements. Compilations don’t require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent CPA as part of their lending covenants.
Agreed Upon Procedures
Sometimes, a company has assurance needs that do not require an audit, review or compilation of financial, but do require procedures to be applied to their financial reporting processes and controls. We can provide agreed-upon procedures to cover these assurance needs.
In Puerto Rico, the government is requesting agreed-upon procedures reports for several procedures or requests. These agreed-upon procedures reports are required to be issued by a CPA authorized to do business in Puerto Rico and who is part of a peer review program. In Guallini, Torres & Asociados, we are part of the peer review program of the Puerto Rico Society of CPAs and, therefore, we can provide these services.