Shareholders, bankers, and private investors often need assurance that the financial statements accurately represent the true financial position of a company. Since they also have different levels of risk tolerance, we provide three levels of assurance to meet your needs.
Audit - Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by 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.
An Audit allows you to:
- Satisfy stakeholders, such as employees, customers and suppliers, and the investing community as to the credibility of published information.
- Facilitate the payment of corporate tax, goods and services tax, and other taxes on-time and accurately, thereby avoiding interest, penalties, and investigations.
- Comply with banking covenants.
- Help deter and detect material fraud and error.
- Facilitate the purchase and sale of businesses.
For Audits, we go outside your company to obtain more information. Typically, we’ll have written communication with:
- Your customers, to check outstanding receivable balances,
- Your banks, to confirm cash or debt balances and terms,
- Your vendors, to verify outstanding payable balances, and
- Your attorneys, for information on pending or threatened legal action.
We also perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client's supporting work papers.
Not Only for Public Entities
All public companies are required to have an annual audit, but some non-public entities must undergo an annual audit as well.
- Local Governments and First Nations,
- Condominium corporations,
- Non-profit organizations, and
- Other organizations receiving government grants.
Moreover, some financial institutions require audits of non-public companies based on the financing amount and/or the bank's assessment of the company's risk. Also, companies with absentee ownership (such as those owned by investment firms or individuals who no longer run the business) may order audits as checks of their management teams.
Review - Limited Assurance
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 verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: "Based on our review, nothing has come to our attention that causes us to believe that these financial statements are not, in all material respects, in accordance with Canadian accounting standards for private enterprises." Reviewed financial statements must include all required notes and other disclosures.
Why might a business request a review engagement?
It can be a good middle ground, providing the advantages of a public accountant's technical expertise without the work and expense of an audit. Banks often require review engagements from an independent public accountant as part of their lending covenants.