The "Basic" set of financial statements normally provided to a business include a Balance Sheet, an Income Statement, and sometimes, a Statement of Cash Flows. The Balance Sheet is a listing of the assets, liabilities, and net worth of a business at any one point in time. It is a "snapshot" of the financial position of the business and is sometimes called a Statement of Financial Position. The Income Statement represents a summary of the activities of a business over a period of time, usually a fiscal year. The Income Statement represents revenue less associated expenses, to show the net profit of a business. The Statement of Cash Flows shows the Sources and Uses of the funds that the business had during the year.

There are three basic "levels" of involvement that a CPA has with financial statements. The levels of financial statement involvement are the Audit, the Review and the Compilation. The remainder of the section explains what each of those three levels of financial statement entails.

Traditionally, independent CPA's have been called upon to audit (examine) client financial statements to provide banks, bonding companies, stockholders and other interested third parties with a report stating that the financial statements fairly present the entity's financial position, results of operations and cash flows in accordance with generally accepted accounting principles. An audit is the highest level of service (and the most costly and complex) of all the traditional services a CPA provides. It provides the highest assurance level that the financial statements are fairly presented, although errors and irregularities could remain undetected.

Key Benefits

• We undergo rigorous formal training, at least 40 hours per CPA per year to keep us up-to-date and informed on the latest trends, techniques and requirements.
• Our staff is experienced in audits, conducting them successfully since 1973.

Reviewed financial statements are relatively new to the accounting profession. The statements look just like those from an audit, but the independent accountant's report does not provide quite the level of assurance as an audit does. For example, the accountant may not observe inventory or confirm accounts receivable such as an auditor might. The report typically concludes that nothing came to the reviewer's attention to cause them to believe that the financial statements were not prepared in accordance with generally accepted accounting principles. Many banks and bonding companies now accept review instead of audits, and the costs of performing the work is less than an audit.

Key Benefits

• Costs less than an audit yet still provides some assurance.
• We comment to management on operating procedures and profitability enhancements as a result of our work, and we are trusted advisors.

A compilation is the presentation, in the form of financial statements, of the representation of the owners or managers, with no assurance made by the CPA. As a result, compiled financial statements are substantially less costly than audits or reviews. At a minimum, many banks require borrowers to provide independently compiled financial statements on an annual basis both for business and individual customers.

Key Benefits

• Timeliness of information for informed decision making.
• Costs are substantially lower than audits or reviews.