Say your accounting staff would just like to speak with someone periodically to confirm the proper recording of your business transactions. Maybe you could use our assistance with formatting, evaluating, or understanding your internal financial reporting process. Perhaps you need our assistance to prepare and evaluate Audited, Reviewed, or Compiled financial statements for outside users (generally referred to as “attest” reporting services). Maybe a specially designed Agreed-upon Procedures reporting arrangement will suffice in place of more costly required audited or reviewed financial statements.
Isler Northwest has the expertise to respond to these and other core accounting and financial reporting needs. In the following paragraphs we cover each of the levels of service mentioned above. We’ll start with the highest level of our reporting services, the Audit Engagement, and follow that up with sections on the following additional financial statement and reporting services:
- Financial Statement Preparation Services
- Compilation Engagement
- Review Engagement
- Agreed-upon Procedures Engagement
The need for an audit is often dictated by shareholders, investors or lenders who look to the audit’s higher level standards for greater assurance about the financial health of the entity in which they have a stake. An audit also serves as a valuable business management tool to help you run your business more effectively. Our approach to auditing is designed to harmonize these objectives and meet them efficiently and meaningfully. (Also see Objective of an audit – The Financial Statements – The Auditor’s Report, below.)
Our seasoned auditors are trained to transform what is sometimes viewed as an intrusive event into a positive interactive experience from which valuable information about your business operations is gleaned and shared. Years of audit experience have sharpened our senses to the operational challenges and opportunities faced by business owners and management. Accordingly, we tailor our audit processes to translate that experience into positive results, unique and beneficial to each business we audit.
We place a strong emphasis on early planning to identify key audit issues related to your organization so our audit engagements are conducted efficiently and with maximum benefit to you. Clear and regular communication with your organization’s leadership is a key component of our audit approach. We also employ progressive technology in our audit tools and processes to ensure timely, efficient, and cost-effective use of all audit resources in order to maximum productivity and minimize inconvenience to our clients. Our audit approach includes the following key elements:
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Audit planning – A successful and efficient audit begins with careful planning. Pre-audit conferences are essential in identifying key transaction issues, isolating matters of interest and opportunity, and establishing the general framework for the audit process. Proper planning promotes personal and regular communication that will carry over into every subsequent aspect of our audit engagement to keep you, your audit committee, and your management informed – from inception to delivery of our report and comprehensive management letter.
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Risk assessment – Our audit approach is designed to assess inherent risks associated with general financial records and their key components. We will perform an evaluation of your internal control systems and assess your control risk and the effectiveness of your analytical procedures in controlling and detecting risk.
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Audit tools – Our industry-tailored audit techniques, forms, and software programs streamline the routine functions of the audit process and give us the tools to be more responsive to your changing needs. Our clients’ financial records are maintained in a “paperless” computer-based environment, with all audit-related records organized in a database. We encourage use of electronic copies of client records to minimize manual procedures and increase audit efficiency.
An audit also serves as a valuable business management tool to help you run your business more effectively. Our approach to auditing is designed to harmonize these objectives and meet them efficiently and meaningfully.
Objective of an Audit; Auditor’s Report
The objective of an audit is to achieve a level of assurance about an organization’s financial condition and operational results by performing certain generally accepted procedures, among which include:
- Comprehensive planning, assessment, and administrative processes
- Comprehensive inquiry and analytical procedures
- Inquiries about internal controls and irregularities, including fraud
- Confirmation of certain balances with financial institutions and third parties
- Confirmation of legal matters and contingencies with legal counsel
- Testing of invoices and other original documents
- Testing of payroll and similar operational transactions
Management is responsible for the preparation of the organization’s financial statements, which contain certain assertions about the economic actions and events of the organization. The auditor’s role is to gain a level of confidence that management has reported historical financial events of the organization in accordance with generally accepted accounting principles.
The auditor’s report, issued at the conclusion of the audit, will express to what degree a reader can rely upon the financial statements as a fair representation of the organization’s financial history.
The auditor’s role is to gain a level of confidence that management has reported historical financial events of the organization in accordance with generally accepted accounting principles.
We can prepare the statements using any acceptable framework of accounting such as income tax basis, cash basis, or accrual basis.
Financial Statement Preparation Services
We offer basic Financial Statement Preparation Services designed primarily to provide financial statements used by management for limited reporting purposes. Although such financial statements are prepared in accordance with formal Statements on Standards for Accounting and Review Services, they are not subject to more comprehensive attest guidelines for compilation, review, or audit engagements. Therefore, no accountant or auditor report will accompany such financial statements.
We can prepare the statements using any acceptable framework of accounting such as income tax basis, cash basis, or accrual basis. A preparation service may or may not include a cash flow statement or disclosure notes.
The purpose of a Compilation engagement is to compile unaudited financial information into financial statements and financial data that reflect management’s representation of the organization’s historical financial condition and events (or other financial matters) based on information supplied by management.
The Compilation engagement is substantially less in scope than an audit engagement performed in accordance with generally accepted audit standards. Accordingly, the Compilation report gives no assurances about the accompanying compiled financial information.
The Compilation engagement is well suited for those situations where a third party user of the financial statements is satisfied with receiving the organization’s financial information with or without required full disclosures under Generally Accepted Accounting Policies (GAAP) and without the added level of assurance provided by Audit or Review services.
Please call us to discuss how a Compilation engagement may benefit you.
The Review engagement is designed to provide financial statements that reflect management’s representation of the organization’s historical financial condition and events (or other financial data), with a level of assurance that is less than that resulting from an Audit engagement. The Review engagement is often used as an alternative to the Audit engagement because it provides to management a more practical, and sometimes more affordable, means of achieving a desired level of limited assurance in contrast to the more extensive Audit engagement.
In a Review engagement we assist in the preparation and review of financial statements to determine whether they are a credible representation of the organization’s historical financial condition and operating results. The conclusions of our Review are presented in a standard Review report, which provides limited assurances, where applicable, that the financial statements are not misleading and the information presented therein conforms to generally accepted accounting principles.
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Review engagement procedures include inquiries of management relating to accounting practices, policies and principles, and about the procedures for recording and classifying financial information. We also apply certain analytical procedures to the organization’s financial information to identify balances, relationships, or trends that suggest areas of financial performance that may warrant further scrutiny and inquiry.
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Our industry-tailored Review engagement techniques, forms, and software programs streamline the routine functions of the Review process, giving us the tools to be more responsive to your changing needs. Our clients’ financial records are maintained in a “paperless” computer-based environment. We encourage use of electronic copies of client records to minimize manual procedures and increase Review engagement efficiency.
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We believe the Review engagement is a sound alternative for third-party financial reporting where assurances of an Audit engagement are not required. Please contact us to explore how a Review engagement can be tailored to meet your assurance needs.
We can prepare the statements using any acceptable framework of accounting such as income tax basis, cash basis, or accrual basis.
Agreed-upon Procedures Engagement
Sometimes your reporting assurance needs don’t require the rigors and expense of an Audit or even a Review engagement. In such cases, a carefully structured Agreed-upon Procedures (AUP) engagement may be the perfect alternative. Under certain circumstances the AUP engagement can be a better and more effective and practical choice. While we apply the same professional standards to AUP engagements as we do our audit and review engagements, AUP engagements are far less involved and can yield valuable information about specific matters that may not be possible with an Audit or Review engagement.
In an AUP engagement, we first identify the specific areas of interest or types of information that are most critical to the parties’ assurance objectives. We then work together with the parties to design procedures to yield results about the specific information or areas of focus identified. These results are summarized in a written report that clearly indicates what was done and what resulted from the procedures performed.
AUP engagements can be designed to report on a variety of areas of focus, such as:
- Accounts receivable and payable balances and processes
- Royalty agreements
- Business acquisition due-diligence
- Income tax provisions
- Investment balances
- Cash balances
- Internal control elements
- Inventories
- Payroll processes
- Franchise agreement compliance
- Contract covenant compliance
The AUP engagement has become more widely employed as a means of providing assurance about specific matters of interest. Those who use it appreciate its targeted approach to providing more useful information about critical issues. We invite you to contact us to explore how an AUP engagement may address your reporting assurance needs.
In an AUP engagement, we first identify the specific areas of interest or types of information that are most critical to the parties’ assurance objectives. We then work together with the parties to design procedures to yield results about the specific information or areas of focus identified.
Additional Services