Audits, Review and Compilation

Government Entities, Stockholders, Creditors, and Private Investors often need assurance that the financial statements accurately represent the true financial position of a company. Each of them have different levels of risk tolerance, so we provide three levels of assurance to meet your needs which is Audit, Review and Compilation of Financial Statements.

All public companies are required to have an annual audit, but some nonpublic entities must undergo an annual audit as well. These include local governments, not-for-profit agencies and other organizations receiving government grants.

Moreover, some financial institutions require audits of nonpublic companies based on the financing amount and/or the bank's assessment of the company's risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may order audits as checks of their management teams.

Audit - Highest Level of Assurance

An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the financial statements, including the verification of specific information as determined by the auditor or as established by general practice.

Our work includes a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.

An Audit allows you to...

• Satisfy Government, Stockholders, Customers, Suppliers and other, as well as the investing community, as to the credibility of published information.
• Facilitate the payment of corporate tax, goods and services tax, and other taxes on-time and accurately, thereby avoiding interest, penalties, and investigations.
• Comply with banking covenants.
• Help deter and detect material fraud and error.
• Facilitate the purchase and sale of businesses.

Here's what we do and what you get...

You get the highest level of assurance because we go outside your company to obtain more information. Typically, we'll have written communication with:
• Your customers, to check outstanding receivable balances,
• Your banks, to confirm cash or debt balances and terms,
• Your vendors, to verify outstanding payable balances, and
• Your attorneys, for information on pending or threatened legal action.

We also perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client's supporting work papers.

Review - Limited Assurance

Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company's management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.

A review doesn't require us to study and evaluate your company's internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: "We are not aware of any material modifications" for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.

Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA's technical expertise without the work and expense of an audit.

Compilation - Lowest Level of Assurance

In compiling financial statements for a client, we present information that is the "representation of management" and expresses no opinion or assurance on the statements. A compilation is limited to presenting information that is the representation of management in the form of financial statements and supplementary information and accordingly we do not express any degree of assurance on the statements. In a review of a company’s financial statements, we express limited assurance that there are no material modifications that should be made to the financial statements. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data.

Compilations don't require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business. Banks often require compilations from an independent CPA as part of their lending covenants.

Which Report Should You Use?

Each type of financial statement report may suit specific circumstances, depending on requirements from your client's bank or other parties, as well as meet budgetary needs.Understanding each report's unique strengths and weaknesses can help you choose the most appropriate one. Please call if you have questions about which type of report is right for you.

Understanding each report's unique strengths and weaknesses can help you choose the most appropriate one. If you are looking for a California CPA in Los Angeles and Southern California that offers Audits, Reviews and Compilations services, contact us today.

We perform following type of Audit

1. HUD Audit
2. Home Owners’ Association
3. Labor Union Audit
4. Non Profit Audit
5. SBA Audit
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HUD Audits

Mortgage Lenders: Whether as a mortgage company owner you require a Certification HUD Audit or Recertification HUD Audit , in accordance with Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS) and Consolidated Audit Guide for Audits of HUD Programs, either as a "Full Eagle" (Nonsupervised Mortgagee) or a "Mini-Eagle" (Nonsupervised Loan Correspondent), we are focused on getting the job done for you! The report must be submitted to HUD electronically within 90 days of the year end.

Insured Multifamily Housing programs, Public Housing and Sec 8 Housing:
Generally, participants in insured multifamily housing program, public housing, and
Section 8 housing must prepare annual financial reports in accordance with U.S.
Department of Housing and Urban Development HUD guidelines, Generally Accepted
Accounting Principles (GAAP). The reports must also be submitted to HUD
electronically for evaluation within 90 days of the year end.

Not all CPAs are able to perform these HUD audits due to the specialization and relevant knowledge required. Focused and in-depth continual training, education and study are necessary to stay abreast of the ever changing requirements involved. With the fallout of the lending institutions nationwide, new and complex rules must be followed in a strict manner.

Home Owners' Association Audit

HOA's in California are also known as Common Interest Realty Associations (CIRA), condominiums, PUDs, timeshares, etc . HOA’s are regulated by the State of California via Davis-Stirling Act 1986 and it is been changing every year since.

We work with the Board and Management Company to provide reports that are accurate, professional, and useful to Association members.

HOA's membership organizations was formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development. This organization should demonstrate that it is operated for the benefit of all the residents of the community. The association should substantiate that areas such as roadways and park land the association owns and maintains are open to the general public and not just its own members, and that it does not engage in exterior maintenance of private homes.

Few requirements to be fullfilled by HOA’s :

• Review of the association’s operating and reserve accounts as well as income and expense statement on quarterly basis.
• Review the current year’s actual reserve revenues and expenses compared to the current year’s budget on a quarterly basis.
• Prepare annual budget and distributed to unit owners.
• A reserve study of the long-term replacement costs must be prepared every three years.
• Disclose summary of association’s insurance to unit owners annually.

We provide following services:

• Audits in accordance with the AICPA Audit and Accounting Guide for Common Interest Realty Association (CIRA)
• Reviews & Compilations – If your Association does not require an audit, we can prepare Reviews or Compiled Financial Statements.
• Management Advisory Letter - Standard financial recommendations to help the Board and management company meet fiduciary duties more effectively. If reportable conditions or material weaknesses exist, they are disclosed in this letter.
• Responding to IRS Notices
• Preparing and Filing Tax Returns

Labor Union Audit

We specialize in each and every accounting service required by labor unions. We assist labor unions in meeting the disclosure and reporting requirements mandated by the U.S. Department of Labor. We are thoroughly versed in the many facets of the Internal Revenue Code that can affect a union's tax-exempt status.

We provide

• Audit
• Review
• Compilation
• Payroll Compliance Engagements
• Agreed-upon Procedures
• Compliance Services
• Preparation of Form 990 "Return of Organization Exempt from Income Tax"

In addition to accounting and auditing services, our comprehensive labor organization services include:

• Reviews of operating and internal control systems, including recommendations for needed improvements.
• Dues audits to determine if employers are complying with the provisions of collective bargaining agreements
• Fair share or agency fee audits, designed to identify and measure chargeable and nonchargeable expenses and implement required record-keeping procedures
• A-133 or program-specific audits required when government grants are received, including audits performed utilizing government auditing standards issued by the Comptroller General of the United States and published in the Yellow Book .

Non Profit Audits

We specialize in Non Profit accounting and Non Profit auditing services. This specialized focus provides a depth of knowledge that is unmatched by most accounting firms. Our hands on approach to your Non Profit audit and accounting services provides tremendous value to your entity. We have years of experience examining the details of Non Profit Organizations' audit.

Whether you operate a charity, school, social service agency, community group, or religious organization, we will make sure you have the right financial systems and controls in place.

We provide

• Accounting
• Audit
• Review
• Compilation
• Operational Audit
• Agreed Upon Procedures
• A-133 [program grant] Audits

Tax Services and Other

• Form 990 Preparation
• Unrelated Business Income
• Intermediate Sanctions/Compensation
• 403(B) plan

Non Profit Organization Executive Officers knows that donors, grantors and creditors often need assurance that the financial statements accurately represent the true financial position of a company. Your donors, grantors or creditors have different levels of risk tolerance, so we provide three levels of assurance to meet your needs which is Audit, Review and Compilation.

Non-profit organizations are facing increasingly complex reporting and compliance issues, including new IRS regulations, (OMB) Circular A-133 requirements, financial statement audits, and strategic planning. At our firm we provide a wide range of audit, consulting, and tax services for your organization. At our firm, we provide a personal approach that allows us to become deeply familiar with the details of your organization, which means we develop a thorough understanding of your business and then perform an audit. Regardless of the size of your organization, you will receive the same level of quality service from our company. We are here to help you.

SBA Audit

The Small Business Administration (SBA) requires 8a firms to provide financial statements with different levels of assurance, depending on the size of the company. All these stakeholders have different levels of risk tolerance, so we provide three levels of assurance to meet your needs.

Audit Requirements

Effective March 14, 2011 new rules went into effect for companies participating in the 8(a) program. These rules affect virtually all aspects of the 8(a) program including compensation levels and eligibility to participate. The new rules loosened some requirements for joint ventures (JV) but restricted other JV requirements. In balance, these rules may be detrimental for some 8(a) firms causing them to graduate long before they reach the small business thresholds. This article addresses the major changes and some concerns for small businesses in the 8(a) program. These rules do not affect other SBA programs.

Another concern for the 8(a) small business is the financial reporting requirements. Such financial reporting has been revised to increase the revenue size before audited financial statements are required. In addition, the first year an audited statement is required, the company may submit only an audited balance sheet.

The financial reporting levels for 8(a) companies is revised to:

• Compilation by CPA firm or in-house financial statements certified by an officer of the company for firms less than $2 million in revenue
• Reviewed financial statements by a CPA firm when the company revenue is between $2 million and $10 million, and
• Audited Financial Statements by a CPA firm when the company revenue exceeds $10 million.

This increase is appropriate. However, due to the total asset test, it may be that a successful sole owner 8(a) firm may not have to submit more than one or two years of audited financial statements to the SBA before it graduates from the program since the fair market value of the company combined with other assets of the owner may exceed the $6 million when the Company’s revenue level goes higher than $10 million thus forcing the company to graduate.