Assurance

There are three levels of financial statement preparation: the compilation, the review and the audit.

In a compilation engagement, a Chartered Accountant is engaged to assemble the financial statements using information supplied by the client. He or she does not offer any assurance to the reader that the statements are prepared in accordance with generally accepted accounting principles, or that the information and statements have been reviewed for fairness or reasonableness.

The next level of preparation, the review, provides an indication that nothing has come to the attention of the CA suggesting that the statements are not in accordance with Canadian generally acccepted accounting principles (GAAP).

The highest level of assurance is provided by the audit. In an audit the CA more closely examines the client's internal control systems, and performs enough tests and collects enough evidence to offer an opinion that the statements are in accordance with GAAP.

Many small businesses find the simple compilation engagement is perfectly adequate for their use. On the other hand, banks and other lending institutions may require that a review engagement be undertaken. Audits are usually required by all Public Companies, and, may often be required for smaller "not for profit" organizations such as charities.

Our firm has substantial experience with all of these engagements, but, as a matter of practice, we concentrate on the compilation and review areas.