At Achen Henderson CPAs, we offer a range of financial statement services tailored to your business needs and the needs of the users who rely on your financial statements.
Audit engagements involve a comprehensive examination of your financial statements and internal controls, providing the highest level of assurance of their accuracy and fairness. For a more limited scope, our review engagements include analytical procedures and inquiries to offer limited assurance on the accuracy of your financial statements. Compilation engagements focus on organizing your financial data into statements without providing any assurance, offering a cost-effective solution for presenting financial information in a clear and organized manner. Finally, a year-end bookkeeping report is designed for companies who do not show their financial statements to any external users, and simply complete the yearend process for internal purposes and tax reporting.
Year-End Statements – When and Why?
An audit engagement involves a thorough examination of a company’s financial statements and internal controls to provide an independent opinion on their accuracy and fairness.
A compilation engagement involves organizing your financial data into financial statements without providing any assurance of their accuracy. While not as comprehensive as an audit or review, compilations are useful for presenting financial information in a clear and organized format.
In 2021, changes were announced to how CPAs prepare ‘Compiled Financial Statements’.
In a review engagement, our team performs analytical procedures and inquiries to provide limited assurance on the accuracy of financial statements. This type of engagement is less extensive than an audit but still offers valuable insights into the financial health of your business.
Financial (bookkeeping) reports for small businesses
Most small businesses need a financial (bookkeeping) report for their T2 corporate tax return just to ensure the books are clean and stay in compliance with tax law, which states that there must be adequate financial information to support the information on the T2. A properly done financial (bookkeeping) report helps you ensure you are not providing false or misleading information to the regulators.
Our Year-End Approach is Different
For Compilations and financial (bookkeeping) reports and tax return engagements, we’re under no obligation to examine our client’s financial information, but we still do it for ethical reasons to ensure that your bookkeeping is as correct as possible and to ensure that the information making its way onto your corporate tax return is as correct possible within the scope of the engagements. We don’t want our clients to provide false or misleading information to the CRA. That can lead to CRA audits—something we don’t want our clients to experience.
We don’t dig as deep as we would in a review engagement, but we do enough to get our own level of comfort. We take a look at each of your trial balance accounts, focusing primarily on the balance sheet, and look for supporting documentation that the owner or bookkeeper has reviewed the balances in those accounts. Our approach is to:
- Ensure the amount of cash agrees with a bank statement or bank reconciliation.
- Check accounts receivable and accounts payable ageing reports for validity.
- Check the additions and disposals in the property, plant, and equipment accounts to ensure they look reasonable.
- Ask questions about some expenses, such as repairs and maintenance, to determine if any items should be capitalized.
- Run amortization calculations to ensure you’re following the right tax treatments and rates.
- Check if the balance in prepaid expenses makes sense.
- Discover whether you have reconciled your actual inventory counts to the balance sheet amount.
- Review taxes owing and see if that matches what CRA and provincial governments have on file and whether they’ve received the payments you made.
- Examine deferred revenues to make sure those are calculated properly.
- Ask about other tax considerations like life insurance, meals and entertainment expenses, legal fees, and automobile expenses.
- Check that your salaries have been properly recorded for the period. This includes analysis to ensure the amounts recorded in your financial statements and tax return are the same as what is reported on your T4s.
- Conduct a high-level check on GST and advise you if there’s a problem with your GST returns.
- Ensure that the simple items that the CRA checks with their analytics are correct before they’re submitted.
We frequently find that businesses lack good bookkeeping and have to make significant adjustments before we can prepare the financial statements. This creates more work for us but also highlights the fact that the financial information provided throughout the year is not helpful to the owners of the business. If you find that your accountant has to make a lot of adjustments to your books, you may need to consider tightening up your bookkeeping practices to help you reduce costs.GET STARTED