What level of financial preparation is right for your business?

What level of financial preparation is right for your business? Each level offers different levels of assurance for the surety. The four levels of financial preparation are in-house, compilation, review, and audit. As a general rule of thumb, companies with higher revenues and more complex operations may require more in-depth financial statement preparation.   In-house financial preparation involves preparing financial statements for internal use. This level of preparation does not involve any level of assurance or validation of the financial statements by a CPA. Compilation financial preparation is done by a CPA and involves compiling financial statements based on the information provided by the client. This level of preparation offers a moderate level of assurance, as the CPA is required to obtain a basic understanding of the client’s accounting principles and practices. However, the CPA does not verify the accuracy or completeness of the information provided. Review financial preparation involves performing analytical procedures and inquiries to provide a limited level of assurance on the financial statements. The CPA will review the financial statements and provide a written report outlining any material misstatements or concerns. This level of preparation offers a higher level of assurance for the surety than compilation, but less than an audit. Audit financial preparation involves conducting a detailed examination of the financial statements and underlying accounting records. The CPA will test the accuracy and completeness of the information provided and provide a written report on the financial statements. This level of preparation offers the highest level of assurance and is often required by external stakeholders such as lenders, investors, and regulators. Your surety company will require you to increase your level of financial preparation as your #bonding needs grow. A good surety partner will let you know ahead of time when they expect a higher level of preparation for future financial statements. If you have any questions or would like a surety professional to help manage and advise your bond program, contact any surety specialist of the Parrot Surety team today!

What level of financial preparation is right for your business? Each level offers different levels of assurance for the surety. The four levels of financial preparation are in-house, compilation, review, and audit. As a general rule of thumb, companies with higher revenues and more complex operations may require more in-depth financial statement preparation.   In-house financial preparation involves preparing financial statements for internal use. This level of preparation does not involve any level of assurance or validation of the financial statements by a CPA. Compilation financial preparation is done by a CPA and involves compiling financial statements based on the information provided by the client. This level of preparation offers a moderate level of assurance, as the CPA is required to obtain a basic understanding of the client’s accounting principles and practices. However, the CPA does not verify the accuracy or completeness of the information provided. Review financial preparation involves performing analytical procedures and inquiries to provide a limited level of assurance on the financial statements. The CPA will review the financial statements and provide a written report outlining any material misstatements or concerns. This level of preparation offers a higher level of assurance for the surety than compilation, but less than an audit. Audit financial preparation involves conducting a detailed examination of the financial statements and underlying accounting records. The CPA will test the accuracy and completeness of the information provided and provide a written report on the financial statements. This level of preparation offers the highest level of assurance and is often required by external stakeholders such as lenders, investors, and regulators. Your surety company will require you to increase your level of financial preparation as your #bonding needs grow. A good surety partner will let you know ahead of time when they expect a higher level of preparation for future financial statements. If you have any questions or would like a surety professional to help manage and advise your bond program, contact any surety specialist of the Parrot Surety team today!