compilation

I have a post at my other blog, Nonprofit Update which provides an analogy to illustrate the differences between the levels of attestation services provided by CPAs:

Evaluating a used car as an illustration of the differences between compilation, review, and audit

The analogy compares three different ways to figure out the quality of a car. I suggest each of those ways is similar to a level of service. Here’s the conclusion:

• Look at the car from across the street – very low cost for low quality information – compilation
• Look around inside in the car and drive it around the block – moderate cost for better information – review
• Have a mechanic work it over – highest cost in terms of time and money but the best information on the quality of the car – audit

Check out the full post for more details on the analogy.

In a webcast on August 31, 2011, Mr. Michael Glynn, CPA, of the AICPA staff, gave a wonderful word picture of the levels of assurance in a review and audit.  Here’s his idea:  Filling up a bucket with procedures produces different levels of assurance.  I would like to expand Mr. Glynn’s description and provide an illustration.

• In an audit, the accountant provides obtain reasonable assurance that there are no material errors in the financial statements.
• In a review, the accountant provides obtain limited assurance that there are no material errors in the financial statements.
• In a compilation,the accountant does not provide obtain any assurance that there are no material errors in the financial statements.

Notice the similarity and difference?  The overlap between these definitions is how much assurance the accountant provides obtains that there are no material errors in the financial statements.

The differences? …

Filling up a bucket – word picture for levels of assurance in audit, review, and compilationRead More »

(cross posted from www.ulvog.wordpress.com)

I have discussed the differences between audits, reviews, and compilations here and here. Even developed a visual illustration here.  Ask any CPA and you can get a long explanation of the distinctions.

For something shorter, consult this article by Angus Loten in the Wall Street Journal, which said:

…

One sentence explanation of the difference between audits and reviewsRead More »

Here is a visual picture that illustrates the different comfort levels someone can draw from financial statements that have been audited, reviewed, or compiled by a CPA. 

Here is a picture of assurance levels from reports issues by CPAs.

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Visual description of the difference between audits, reviews, and compilationsRead More »

This is an explanation of the visual picture I drew in the previous post.  I will try to explain the differences between audits, reviews, and compilations with a minimal amount of the technical words we CPAs usually bring to an issue.  …

What comfort level is there from an audit, review or compilation report?Read More »