What are Accounting Compilation Services?
Compilation services is an act of compiling data of the business entity when determining the financial health to have a clear picture of the company or organization's direction per accounting and taxation standards.
Why does a Business need Financial Statement Compilation?
Compiled financial statements are significant as they accurately reflect the company's business performance, company's condition, and financial position. It helps all stakeholders, including management, investors, financial analysts, etc., evaluate to make a budget and operating decisions by comparing past and current performance and, therefore, predicting future company performance and growth.
How to make Financial Statements?
A Professional who has the title of Certified Public Accountant (CPA) can provide different levels of financial statement services to a corporation. They accurately organize and collect the financial data in the period covered.
These are three general levels of compilation financial statement service: audit, review, and compilation.
What is an Audit, and Why does a Business Need it?
A CPA may provide the highest level of financial statement service, an audit. It is the process of studying and evaluating financial accounts to ensure that they are a fair and accurate depiction of the transactions they claim to represent.
Depending on how large the company is, the auditor assesses the finances of a company and makes sure that all finances are taken care of under national and international laws. It involves inspecting an entity's physical assets, such as real estate and equipment or products. Also, it reviews not only the financial statements and records but the client's policies and procedures and their adherence to regulatory compliance.
The auditor then compiles a report that explains their findings, makes opinionated conclusions about the company's financial health and lets stakeholders know how well they have been managing finances according to accounting, financial, and tax.
What is a Review, and How to do it?
A financial statement review is a service under which the accountant obtains limited assurance that they must make no material modifications to an entity's financial statements to conform with the applicable financial reporting framework.
Reviewing financial statements helps to know the condition, performance, and ability to sustain past and future operations of a particular business efficiently.
Here is the step by step to perform a review;
- Review the financial condition of a business by looking at how it manages its asset, liabilities, and equity using the balance sheet.
- Review the revenue, expenses, profit(loss) before tax, income tax, and profit(loss)after tax statement report to understand a business's overall performance, profit, or loss in a given period.
- To understand cash movement in a given period, use the cash flow statement that comprises the indirect method and direct method.
- Check the statement of stockholder's equity to get the details on the movement of the equity account discussed in the balance sheet.
- Look at the notes to the financial statement to read the narrative explanation of the complete financial statement.
What is a Compilation?
A compilation is the company's financial statement that has been compiled by an in-hire or outside professional accountant to assist the business entity with the preparation and presentation of historical accounting data in the form of entries, ledger, journals, trial balance, etc., and provided by management. The accountant then converts it into formal financial statements.
In this instance, the professional accountant should possess a superior knowledge of the business's operations to compile the financial statements to ensure the financial statements are in the appropriate format and free from apparent errors and misstatements.
Hence, Westwise Consult Inc. is a prominent accounting and taxation firm that has handled various companies in the Philippines, offering compilation services, auditing, and other accounting-related services.