Financial Statements are documents that present the various monetary activities of a company. A Financial Statement comprises of three elements:
- Balance Sheet
- Cashflow Report
- Income Statement.
How to prepare a Financial Statement?
A Financial Statement is prepared by financial experts. They gather the information related to the company’s monetary transactions and then prepare a financial statement accordingly. This is also known as Financial Statement Compilation.
These are the steps usually followed while preparing a Financial Statement:
- Collection of data from various departments of the company.
- Cross-checking of the collected data to avoid any errors while preparing the statement.
- Using the collected data to create the three components of the Financial Statement, i.e., Balance Sheet, Cashflow Report, and Income Statement.
- Reconciliation of the data to make sure that everything is well integrated.
Once the Financial statement is prepared, it is time to review the statement.
What is a Financial Statement Review?
A Financial Statement review is a process where the Financial Statement is analyzed for the legitimacy of the reports. This assures the prospective business partners and auditors that the company is portraying legitimate and real facts about itself while making a deal or during an audit. This process is also known as Financial Statement Compilation Review.
Process of Conducting a Financial Statement Review
Here is an outline of the procedures generally followed to conduct a Financial Statement Review:
- Decide the individual/committee which is going to conduct the review.
- Inquire about the sources and methods used to gather the data mentioned in the statements.
- Compare the figures and ratios mentioned in the statement with the industry standards and the past performance of the company.
- If any discrepancy is found, ask for clarifications and conduct investigations if necessary.
- Inquire about suspicious transactions, if there are any, near the end of the accounting period.
- Ask follow-up questions on the previous inquiries.
A Financial Statement provides information about a company’s monetary transactions. It provides detailed information about all the monetary transactions of a company. These transactions include costs, sales, taxes, and investments. A FS Review gives assurance to a company that the data provided is legitimate and factual.
You can effectively implement this process in your business by using the Boston Financial Advisory Group(BFAG)’s services for Financial Statement Compilation and Review. BFAG has experienced financial experts who use the latest technologies and methods to strategically prepare your financial statements so that you can have an error-free and competent review process.
So, get in touch with us to avail our services.
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