Stockholders, creditors, and private investors often need assurance that the financial statements accurately represent the true financial position of a company.

Your stockholders, creditors, or private investors have different levels of risk tolerance, so I provide three levels of assurance to meet your needs.

Audit – Highest Level of Assurance

An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by general practice.

My work includes a review of internal controls, testing of selected transactions, and communication with third parties. Based on my findings, I issue a report on whether the financial statements are fairly stated and free of material misstatements.

An Audit allows you to…

• Satisfy stakeholders such as employees, customers, suppliers and pressure groups, as well as the investing community, as to the credibility of published information.
• Facilitate the payment of corporate tax, goods and services tax, and other taxes on-time and accurately, thereby avoiding interest, penalties, and investigations.
• Comply with banking covenants.
• Help deter and detect material fraud and error.
• Facilitate the purchase and sale of businesses.

Here’s what you get…

You get the highest level of assurance because we go outside your company to obtain more information. Typically, I’ll have written communication with:

• Your customers, to check outstanding receivable balances,
• Your banks, to confirm cash or debt balances and terms,
• Your vendors, to verify outstanding payable balances, and
• Your attorneys, for information on pending or threatened legal action.

Financial Statement Compilations:

I also perform physical inspections by observing your inventory counting methods and perform test counts. I document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. My audit papers include a detailed work program to document the examinations and testing performed, as well as the client’s supporting work papers.

Audits Not Just for Public Entities

All public companies are required to have an annual audit, but some nonpublic entities must undergo an annual audit as well. These include local governments, not-for-profit agencies and other organizations receiving government grants.

Moreover, some financial institutions require audits of nonpublic companies based on the financing amount and/or the bank’s assessment of the company’s risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may order audits as checks of their management teams.

Review – Limited Assurance

Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries I make of your company’s management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, I may need to perform additional procedures.

A review doesn’t require us to study and evaluate your company’s internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: “We are not aware of any material modifications” for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.

When it comes to auditing, Solomon & Associates can help in consideration and evaluation of the internal control system of the company, which may include testing the effectiveness of the system, tests of the underlying documentation to support account balances, observation of the physical inventory counts (if any) and outside confirmation of account receivable balances.