Understanding the cost of compiled financial statements can help you plan better. These reports are prepared by a CPA using the financial data you provide. They don’t include deep analysis or audits, which makes them more affordable. CPAS offers this service to organise your numbers into a clean, professional format. In this guide, you’ll learn what goes into the cost of compiled financial statements and how CPA fees are determined.
What Are Compiled Financial Statements?
A compiled financial statement is prepared by a CPA based on the information provided by the business. The CPA does not perform any thorough analysis or verification of the economic data. Simply, they arrange and format the data into a standard set of financial statements, adding the balance sheet, income statement, and cash flow statement.
What Are Reviewed Financial Statements?
Reviewed financial statements are more extensive than compiled ones. In a review, the CPA performs specific analytical processes, such as comparing the current year’s financial data with that of previous years or industry standards. The CPA also makes queries to review whether the financial statements are free from material errors.
Key Differences Between Compiled and Reviewed Financials
1. Level of CPA Involvement
A compiled financial statement is produced based on the numbers you give your CPA. No thorough checking or analysis is involved. In contrast, a reviewed financial statement adds queries and basic reviews by the CPA to spot anything unusual or inconsistent.
2. Assurance Provided
The CPA simply puts the data into a formal format without verifying it. Reviews, however, provide limited certainty, meaning the CPA has checked the numbers just enough to feel reasonably confident they are correct.
3. Depth of Analysis
In a review, the CPA uses analytical procedures, such as comparing current numbers with past figures, and asks questions to gain a better understanding of the financial picture.
When Do You Need Compiled Financial Statements?
Compiled financial statements are helpful when your business needs a clear summary of its finances but doesn’t require detailed reviews. They are ideal for small companies or startups that want a simple report for internal use, basic planning, or sharing with lenders who don’t require high-level assurance. A CPA takes your existing data and organises it into standard financial documents like a balance sheet and income statement without certifying the numbers.
How Are Compiled and Reviewed Financial Statements Prepared?
Compiled Financial Statements
- The business provides financial records to the CPA.
- The CPA organises the numbers into formal statements.
- No checks, analysis, or testing are performed.
- The information is presented as-is, based on client data.
- A compilation report is included, stating no certainty is given.
Reviewed Financial Statements
- Financial data is submitted to the CPA, just like in a compilation.
- The CPA performs limited analysis and contrasts figures.
- Requests are made to understand certain balances or changes.
- Unusual trends or variations are reviewed and addressed.
- A review report is issued, offering limited assurance on the statements.
The Role of a CPA in Financial Reporting
A Certified Public Accountant plays a vital role in both compiled and reviewed financial statements. Whether you are looking for a compiled financial statement for internal use or a reviewed financial statement for external verification, a CPA verifies that the economic data is presented clearly and authentically.
- Tailored CPA Services: A modified CPA can customise their services based on your specific needs, whether it’s preparing financial statements or conducting reviews.
- Expertise and Assurance: Working with a CPA certifies that your financial statements comply with related accounting standards and rules, giving you peace of mind that your business’s economic health is accurately represented.
Reviewed or Compiled Financial Statements: Which One Is Right for You?
Selecting between compiled and reviewed financial statements depends on your business’s demands. If you are a small business owner with direct financials, a compiled statement may suffice. However, if you are looking to engage financiers or need more confidence in your financial data, a reviewed statement may be a better option.
How Business Size Impacts CPA Fees
The size of your business directly affects the cost per account (CPA) fees for financial services. Larger companies often have more complex financial data, requiring additional time and effort to compile. Smaller businesses typically incur lower costs due to simpler financial reporting needs.
Average Price Range for Compiled Financial Statements
The cost of compiled financial statements can depend on a business’s size and complexity. On average, larger companies may face higher fees due to more detailed financial work.
How to Budget for CPA Services
When budgeting for CPA services, consider the scope of work required, your business’s size, and the complexity of your industry. It’s essential to get quotes from different CPA’s to confirm you are getting a fair price while meeting your financial reporting needs.
