Understanding CPA Engagements for Financial Statements

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Understanding CPA Engagements for Financial Statements
Navigating the world of financial statements is challenging. As a business owner, you might
have come across terms like preparation, compilation, review, and audit. Let’s break it down
what these terms mean and which one is right for your business.

Financial Statement Preparation
This is the most basic service where we help you prepare your financial statements. It is like
giving your financial data a professional touch. There is no deep dive into the numbers, but
you’ll get a set of statements that reflect your business’s financial standing. It is ideal if you just
want to understand where your business stands or if you are sharing this information with a
select few.

Think of a compilation as a step up from preparation. Here, we use our accounting expertise to
present your financial data in a more structured manner. While we don’t provide any assurance
on the accuracy of the numbers themselves, we help ensure the presentation is in line with
applicable professional standards. And to be honest, the mere association with a CPA firm can
give your statements a credibility boost. This is especially handy when you are seeking initial
financing or have significant collateral to back you up.

A review is for businesses that are on the growth path. As you seek more significant financing or
credit, lenders might want a bit more confidence in your numbers. We will perform meaningful
analytical procedures, ask you applicable questions, and in the end provide limited assurance
on your financial statements. It is like having a trusted advisor give your numbers a once-over
and nod in approval.

The big one. An audit is the most thorough examination of your financial statements. We will do
a detailed analysis, verify, cross-check, and more. At the end of it, we provide an opinion on
whether your statements are a true reflection of your business’ financial health and activity in all
material respects. If you are looking at significant financing, mergers, or attracting investors, an
audit is the way to go.

Cost Implications
Every business is unique, and so are its requirements. While preparation is generally the most
affordable, an audit, given its depth and comprehensiveness, requires the most time and
investment. It is not just about cost—it’s about what your business needs at its current stage.
Whether you are just starting out or gearing up for a significant business move, MCK CPAs is
here to guide you every step of the way. Reach out to us today let us help you with your
financial statements.