Compiled Financial Statements

 Business owners need financial statements on a regular basis to track the progess of their business, and provide a tool to be proactive about growth and design strategies to continue that growth.  Financial statements are also an important tool for annual income tax planning,

We provide monthly compiled financial statements for this purpose.

In compiling financial statements for a client, we present information that is the "representation of management" and expresses no opinion or assurance on the statements. Compilations don't require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.

Banks often require compilations from an independent CPA as part of their lending covenants.

What is a financial statement?

Financial statements are documents that mostly contain numerical data regarding the performance of a company. When it comes to public companies -- companies that have their stock open for purchase on financial exchanges like the New York Stock Exchange and the NASDAQ Stock Market -- there are four primary financial statements: the income statement, the balance sheet, the statement of retained earnings, and the statement of cash flows.

What is an income statement?

An income statement shows income for a period, typically one year in length. Companies start and stop their income statements at arbitrary points in time -- not necessarily January 1 through December 31 -- depending on which better meets their needs.

Income statements start with total revenue and are followed by the cost of revenues - the expenses incurred in trying to generate sales. The first minus the latter equals gross profit. From there, taxes, amortization, depreciation, and other overhead are factored in to arrive at net income.

What is a balance sheet?

Balance sheets show total assets, liabilities, and stockholders' equity for a particular moment in time. Unlike income statements, which only concern one year's performance, balance sheets show the net worth of companies and detail the items they own and the debts they owe.

What is the statement of cash flows?

Put simply, this financial statement shows where all cash flows throughout a year's time -- or however long the period at hand is. This optional financial statement isn't used as frequently as the aforementioned two.

What is the statement of retained earnings?

Retained earnings, as their name implies, refers to all earnings that remain within a business to be used in future operations. The statement of retained earnings shows the rise or fall in retained earnings for a period.

What is a compilation?

A compilation refers to the creation of all four major financial statements without auditing or performing a review of them. 

Financial statements that aren't certified are released as compiled or prepared financial statements.

The main difference between the two is that financial statements that are compiled are read by the CPA.  The CPA considers if the financial statements are in the appropriate form and free from obvious material misstatements.

A prepared financial statement is similar to a compilation and is accepted by financial institutions for small loans.  The financial statements are directly prepared from the information the company provides without verification for accuracy or completeness of the information.

Please call if you have questions about financial statement preparation or you can complete the form below for a Free Consultation.

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