Should a small business have their financial statements reviewed by a CPA?

Ken Blake
CPA

Should a small business have their financial statements reviewed by a CPA?

Well it depends how far along in business the company is. There's actually three different levels of financial statements that a company can have; there's the compilation, a review and an audited financial statement. Most companies are fine with just a compilation which essentially means that an accountant looks at your financial statements maybe makes some reclassifications, maybe changes some wording here and there, puts in a few footnotes about your company does and then the financial statement is issued under their cover letter. The next level up is the review financial statement. And the review financial statement means the accountant goes in a little bit more deeply. Generally there's more footnote writing involved and accountant takes a much more proactive approach to formatting the financial statements and making sure that all the numbers tie out. And then the final level or the upper level is what we call audited financial statement. That's when the accountant do certain testing procedures so that is so they can try and feel comfortable with the numbers based on statistical analysis evaluation of different aspects of the business. These statements are the ones that public companies are required to have.