Audit Engagement
The highest level of service is probably the most well-known and is called the audit. It is called an attestation engagement due to the assurance given on the financial statements. A standard audit letter is issued upon completion of the audit. A clean bill of health audit letter is desired, but other versions of the letter stating concerns may be the result.
An extensive set of procedures are performed on the client’s operations. Everything from a review of internal controls to reviewing the bank accounts are done. Depending on the size of operations, the audit may entail a lot of work to complete. Therefore, audits are very costly. If the organization is publicly traded on the New York stock exchange or receives a certain level of government grants, a yearly audit may be required.
Review
A review is less in scope than an audit and provides only limited assurance on the validity of the financial statements. In lieu of actually going through the books physically, more reliance is placed on client inquiry. Like the audit letter of assurance, varying letters may be used based upon issues identified during the review.
Compilation
A compilation is simply the procedure of taking client-provided data and assembling it into a set of financial statements. No assurance is provided. The letter simply states the data is the client’s and the CPA firm simply put it together. No assurance of any kind is given. Because of this, independence from the client is not a requirement to perform this level of engagement.
Agreed Upon Procedures
You may basically hire a CPA to do most any type of procedures required. They are “agreed upon” between the client and the CPA firm. Encompassing everything from compliance with bond requirements to a special engagement to help secure a loan may be included. Prices vary according to the depth and assurance level the procedures require. Basically, the higher the assurance required, the higher the price will be.
Summary
With most engagements, a tax return is usually prepared. And personal tax returns for the entire immediate clan is also completed. Not to mention the 401k limited scope audit on the company’s retirement plan option. And then there are the grandchildren’s trusts which have accounting work and tax returns due.
For More Information
The AICPA website may be accessed online. Also any local CPA firm will be glad to go over their services and fees.
