There’s a lot that goes into accounting – from bookkeeping and financial statements to tax preparations and payroll. It can be a complex process with many moving parts, but it’s essential for businesses of all sizes. The benefits of good accounting can’t be overstated, as it can help reduce costs, improve efficiency, and make better financial decisions.
Compliance with government regulations is another important aspect of accounting. Businesses that don’t stay compliant with the law may face severe penalties, including fines and jail time. Even the most diligent business owner can’t reduce the risk of non-compliance to zero. Still, one way to mitigate it is to use accounting attestation services.
Read through the article to learn everything you need about attestation services, what they are, and how they can help you stay compliant with the law. We’ll also discuss the types of attestation services and who may need them. Whether it’s your first time considering attestation services or you want to know how to get the most of them, this article will give you the information you need.
What Is Accounting Attestation, And How Does It Work?
Attestation services are a type of assurance service that provides an independent opinion of a business’s financial statements or other information. The stakeholders then use the attestation report to make decisions about the business. You can also use attestation services to assure internal controls, compliance with laws and regulations, and other areas.
The practitioner must first understand the client and its environment to conduct an attestation engagement. To do this, they must learn about the client’s business activities, internal controls, and risk management processes. The practitioner then evaluates the evidence gathered to form their opinion. The attestation report will include this opinion and recommendations for improvement.
Benefits Of Accounting Attestation
Businesses can enjoy many benefits from using attestation services, including:
As we mentioned, staying compliant with laws and regulations is essential for any business. An attestation service can help ensure that you follow all the required guidelines.
With accurate financial information, you’ll be able to make better decisions about where to allocate your resources. As a result, improving your bottom line and growing your business will become easier.
Reduced Risk Of Errors
When someone else reviews your financial statements and accounting practices, they can catch any errors you may have missed. This way, you can save time and money in the long run.
Knowing that your financial statements are accurate and up-to-date can give you confidence as a business owner. You’ll also have more time to focus on other aspects of running your business.
Strengthened Internal Controls
Your business may have areas where your controls are weak and need improvement. Through an attestation service, you can work to strengthen these controls and prevent fraud or misuse of company funds.
Who Conducts An Attestation Service?
Certified public accountants (CPAs) typically conduct attestation services. CPAs are professionals who have passed an exam and met other requirements set by their state. They must uphold a strict code of ethics to use the CPA designation.
Many business owners find accounting and financial statement preparation daunting. Even with the help of software and online tools, it can be challenging to get everything right without proper training and experience. However, CPAs have what it takes to help you prepare accurate and compliant financial statements. In addition, they can offer valuable insights into your business operations and advise on ways to improve your bottom line.
Types Of Attestation Services
There are four types of attestation services: auditing, reviewing, compiling, and agreed-upon procedures. Each has a different level of assurance and is suitable for different situations.
Auditing is the most comprehensive type of attestation service. It entails a detailed examination of your financial statements and accounting records. Therefore, it takes the longest to complete and has the highest cost. Audits provide the highest level of assurance, and lenders or investors typically require it.
A review is less comprehensive than an audit but still provides some assurance. This attestation service is suitable for businesses seeking financing or entering into new contracts that don’t want to go through an audit’s hassle (and expense).
A compilation is the simplest type of attestation service. In this case, the CPA puts together the financial statements from information provided by the client. Because the CPA doesn’t verify the accuracy of this information, compiling doesn’t give any assurance.
Agreed-upon procedures are between a review and a compilation in terms of assurance. The CPA and the client agree on the specific process that will be performed, like testing internal controls or reviewing certain transactions. As with a review, agreed-upon procedures give no assurance.
The Standards For Attestation Services In 2022
The American Institute of Certified Public Accountants (AICPA) sets the standards for attestation services in the United States. These standards are known as the Statements on Standards for Attestation Engagements (SSAEs). The SSAE 18 is the most recent version, and it’s what CPAs must follow when conducting any attestation service.
The SSAE 18 covers a wide range of topics, including the objectives of an attestation engagement, the responsibilities of the CPA, and the quality control procedures that should be in place. It also includes guidance on specific practices that may apply to certain types of attestation engagements. The most significant changes from its predecessor, the SSAE 16, are that the SSAE 18 tries to simplify standards and converge with international statements.
What To Expect From An Attestation Service
When you engage in an attestation service, you can expect the CPA to follow specific procedures.
Understanding Your Business
First, the CPA will guarantee that they understand your business. They will ask questions about your business model, organization, and processes. The attestation team will also review your financial statements and supporting documentation.
Establishing Control Objectives
After the CPA understands your business, they will establish control objectives. Control objectives are the specific areas the attestation team will focus on during their engagement. They will then design tests of controls to determine whether the controls are operating as intended.
Once they’ve established the control objectives, the attestation team will perform tests. These tests may include analytical procedures, inquiries of management, and observation. The CPA can execute transactions and observe activities to assess adequate controls. After testing is complete, they will prepare a report detailing their findings.
Develop Remediation Plans
Finally, the CPA will work with you to develop remediation plans if there are any deficiencies in internal controls. They may suggest changes to policies, procedures, or processes. The goal is to ensure that your business corrects any deficiencies to continue operating effectively.
In some cases, the CPA may not find any deficiencies. In that case, they will issue a clean report. This report is also called an unqualified opinion and indicates that the CPA found the controls effective.
Who May Need Attestation Services?
Plenty of businesses and organizations may benefit from using attestation services. Some common examples include:
If You’re Applying For A Loan
Businesses that seek financing may need some attestation service. Lenders will want some assurance that the business can repay the loan. Small businesses, in particular, are more likely to be asked for financial statements reviewed or audited by a CPA.
If You’re Entering Into A New Contract
A potential business partner may require an attestation service before entering into a contract with you. It will help them understand your financial situation and assess the risks involved in working with your company.
If You’re Contracting With The Government
When applying for a government contract, the contracting agency must determine whether your company is a responsible contractor. An attestation service is a great way to show that your finances are in order.
If You’re Selling Your Company
You don’t need an attestation service if you’re only selling your assets. However, when selling your entire company, the buyer will likely require an attestation service as part of the due diligence process.
There are many other situations in which you may need an attestation service. If you’re unsure whether you need one, it’s always best to speak with a CPA.
Tips For Getting The Most Of Your Attestation Services
Now that you know the basics of attestation services, you may wonder how to get the most out of your engagement. Here are some tips:
- Be Transparent: The CPA conducting the attestation will need access to your financial records and documentation. Be sure to give them everything they need to complete their work accurately and efficiently.
- Ask Questions: Ask the CPA for clarification if you don’t understand something about the process. You must understand the attestation results to make informed decisions about your business.
- Follow Their Recommendations: If the CPA finds deficiencies in your internal controls, follow their recommendations for remediation. This step will allow you to improve your controls’ effectiveness and prevent future problems.
Nesso Accounting – Reliable Attestation And Accounting Services
At Nesso Accounting, we have experience with all types of attestation services. We’ll work with you to understand your business and develop a plan that meets your specific needs. We can determine the best service for you and complete the engagement efficiently. Whether you’re seeking financing, contracting with the government, or selling your company, we can help.
At the Nesso Group, we offer integrated solutions to reduce stress and improve success. We guide people and businesses in several fields, including accounting, insurance, taxes, wealth, and more. The Nesso Group breaks the status quo: we care deeply about the people we serve and work to serve them well. Let’s work together with your best interest in mind.