How to Prepare for Your Attestation Service
Choosing the Right Financial Assurance Service
When it comes to financial reporting, businesses and organizations often require attestation services, but there’s often confusion about what these services actually entail. Many people think they are undergoing an audit when, in reality, they are receiving a different level of service. Understanding the differences between an audit, a review, and a compilation can help you determine which service best meets your needs.
The Three Levels of Attestation Services
At Hantzmon Wiebel, we provide three primary levels of attestation services:
Audit: An audit provides the highest level of assurance, meaning that we perform a detailed examination to provide reasonable assurance that your financial statements are free from material misstatement. It’s a comprehensive process that includes testing financial transactions, confirming balances, and gaining an understanding of internal controls.
Review: A review provides only limited assurance. This means we analyze financial statements using inquiry and analytical procedures but do not perform in-depth testing of transactions. It’s less extensive than an audit but still provides valuable insights.
Compilation: A compilation involves assembling financial statements based on the information provided by the client. Unlike an audit or a review, we do not provide any assurance regarding the accuracy of the financial statements. However, we do issue a compilation report that accompanies the financial statements.
Preparing for Your Attestation Service
Regardless of the level of attestation service you need, preparation is key to ensuring a smooth and efficient process. Here are some steps you can take to be ready:
Communicate Early and Often
One of the most important steps in preparing for an audit, review, or compilation is clear communication. Work with your accountant to establish a timeline that meets your reporting deadlines. A well-planned schedule allows both parties to align expectations and avoid last-minute challenges.
Maintain Accurate and Timely Reconciliations
Reconciling your accounts regularly throughout the year is crucial. If your accounts are not reconciled before our engagement begins, the process can become more time-consuming. Monthly reconciliations of bank statements, accounts payable, accounts receivable, and other subsidiary ledgers will help ensure accuracy and efficiency.
Document Key Financial Information
Proper documentation is essential, especially for an audit. Ensuring that financial records, reconciliations, and other supporting documents are signed and dated helps demonstrate compliance and facilitates a smoother engagement. While this is particularly important for audits, maintaining thorough records is beneficial for any attestation service.
Stay Informed on Accounting Standards
Accounting standards evolve, and keeping up with changes is important. We communicate upcoming changes to our clients, but it’s the organization’s responsibility to implement them. Significant updates should be reviewed and addressed well before year-end to avoid last-minute adjustments.
Ensure Reports Tie to the General Ledger
Before submitting financial reports, verify that they align with the general ledger. If discrepancies exist, they will need to be addressed before we can proceed with the attestation engagement. Taking the time to ensure accuracy in advance can prevent delays.
Review Prior Engagements
Looking back at previous audits, reviews, or compilations can provide valuable insights. Reviewing past journal entries and reconciliations can help you identify adjustments that may need to be made before providing financial statements for the current engagement. Proactively addressing these items can save time and streamline the process.
The Retirement Plan Audit Process
At Hantzmon Wiebel, retirement plan audits are conducted with a focus on several critical aspects:
Review Plan Documents: We analyze the adoption agreement and summary plan description to understand plan elections and rules.
Evaluate Policies & Procedures: We examine how the plan is administered in practice.
Identify High-Risk Areas & Conduct Testing: We perform detailed tests to ensure compliance.
Provide Audited Financial Statements: After completing the audit, we deliver financial statements for Form 5500 filing with the DOL.
Being prepared for your audit, review, or compilation engagement not only makes the process more efficient but also ensures that your financial statements accurately reflect your organization’s financial health. By maintaining open communication, reconciling accounts regularly, and staying informed on accounting standards, you can set yourself up for a successful engagement.
If you have any questions about which attestation service is right for you or how to best prepare, we’re here to help. Contact us at Hantzmon Wiebel to discuss your financial reporting needs.
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Audits can be difficult to navigate, but Hantzmon Wiebel is here to help. We can assist you in remaining compliant with the IRS’s guidelines. Learn more at https://www.hwllp.cpa/audit
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Disclaimer of Liability
Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.
