Investors, grantors, boards of directors, stockholders, and other third parties often require assurance that the financial records are accurate and correctly reflect the financial condition of the company. Cooke, Lavender, Massey, & Company, PC provides audit and review services to both nonprofit and for-profit companies.
Whether you run a for-profit business or a nonprofit, audits and reviews are beneficial because they provide various levels of assurance that management has presented a ‘true and fair’ view of a company or organization’s financial performance and position. Audits and reviews can help your company or organization identify insights about some areas where management may improve their processes and can help to produce accurate financial statements that provide information about their financial position and performance.
Audits and Reviews Staff
The staff members listed below handle our audits and reviews. Click on a staff member's image to see their contact info and learn more about them.
Financial auditing is the process of evaluating the financial transactions and statements of a company or organization.
Generally, a financial audit has four phases:
- First, our CPAs will gain an understanding of your business or organization. This phase includes examining prior financial statements, discussions with management and others, research about your industry if necessary, and discussions with predecessor auditors if they exist.
- In the next phase, our auditors perform risk assessment and assess the risk of material misstatement. The success of our audits is dependent upon the time spent in planning the general scope and direction of each audit. Risk assessment audit standards require assessments based on an understanding of internal controls over your financial reporting and determination of the areas that present risks of material misstatement to your financial statements.
- The third phase of an audit is the testing phase. Upon completion of our risk assessment, we will design our audit approach to include tests of specific internal controls and substantive audit procedures which are tailored to identified risks.
- The final phase of an audit includes reporting our findings. This phase includes our preparation and review of the financial statements and agreement to underlying audited records; evaluating the financial statements for compliance with generally accepted accounting principles; formulating our audit opinions for financial reporting; and preparing our management letter with internal control recommendations and our communication letter to the Board.
We can also make a formal presentation of the audit results and reports to the Board of Directors and be available to respond to their questions.
Types of Auditing Services
Cooke, Lavender, Massey & Company, PC conducts several types of audits depending on the situation and the requirements of the client.
Single Audit: This type of audit is required for any organization that expends more than $750,000 in federal funding in a given year.
A Single Audit examines the way an organization managed grant funding to ensure they complied with all the requirements of the grant and the Uniform Guidance. A Single Audit provides the Federal government with assurance that recipients of federal funding comply with program requirement by having an independent external source (the CPA) report on such compliance.
Compliance Audit: As the name implies, a compliance audit is an independent evaluation to ensure that an organization is following external laws, rules, and regulations or internal guidelines, such as corporate bylaws, controls, and policies and procedures.
HUD Audit: The U.S. Department of Housing and Urban Development (HUD) requires audits of entities participating in various HUD programs. A HUD audit consists primarily of an audit of the HUD-assisted entity’s financial statements and an audit of the entity’s compliance with HUD program requirements for major programs.
Financial Statements Audit: Financial audits are one of the most common types of audits. This type of audit is the examination of an entity's financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures.
Auditing Services Frequently Asked Questions
How much do audits cost?
Every audit is unique. The cost of an audit varies depending on the type of audit, the size of the company, the condition of the financial documents, and many other variables.
How long does an audit take?
Every audit is unique with varying timelines. Depending on urgency, timing, and client staff resources we can complete an audit as quickly as two to three weeks. Typically, the process takes place over a one to two month timeframe. The process includes planning and preparation, on-site fieldwork, and final completion procedures and preparation of the final audit report.
When should you get audited financial statements?
Bankers, bonding companies, grantors, shareholders, and other third parties often require an audit of a business or nonprofit organization. An annual audit can be beneficial for numerous reasons.
If a company has many shareholders, having regular financial audits helps ensure financial transparency and may prevent litigation.
Audited financial statements are beneficial for owners considering selling their business. Reliable financial statements help buyers have a clear understanding of a company’s financial condition and may even increase the selling price of a business.
Larger companies or organizations benefit from audits because the process helps identify areas of concern and highlight ways to improve internal control structures.
Nonprofit boards of directors and by-laws often require regular audits. Independent financial reviews are an excellent way to demonstrate an organization’s financial transparency and trustworthiness. Many organizations publish independent audits on their website or provide the information upon request to donors and investors.
Many public and private funders require organizations to submit regular audited financial statements or conduct an audit to be eligible for funding. Potential investors and grantors want assurance that the nonprofit is trustworthy, and their financial practices meet acceptable standards.
Auditing Services Should Ask Questions
There are several helpful questions a business or nonprofit should ask before undergoing an audit. These questions will help you determine whether you need an audit and what type of audit will be most beneficial.
Is an audit required in my circumstance?
An audit is not always required or even a valuable investment. While many businesses and nonprofits do enjoy benefits from regular audits, smaller organizations with limited budgets usually do not need and cannot afford audits.
Many investors, grantors, boards of directors, or by-laws require regular audits for their organization or business.
Many federal and private grants require regular audits for accountability. Audits are also necessary for any nonprofit that expend more than $750,000 in federal awards.
What value will an audit provide my organization?
Different types of audits provide different feedback and are valuable for a variety of reasons. Audits are opportunities to ensure a business or nonprofit is complying with necessary regulations and minimize risks. Audits also provide valuable insight into how a company performs and opportunities for improvement.
Audits also ensure your financial documents are accurate and up to date. This increases the confidence of current or potential shareholders, investors, and lenders, and it helps the business make better, more informed financial decisions.
Regular audits help businesses remain compliant with complicated requirements, and they promote good business practices by identifying ways to improve controls and processes.
What value will an audit offer my customers, shareholders, or donors?
Different types of audits provide different feedback and are valuable for a variety of reasons. A rigorous audit process will help to identify areas where management may improve their controls or processes, further adding value to the company by enhancing the quality of its business processes.
Audits offer grantors, lenders, investors, and donors assurance that the financial statements being used to make financial decisions are fairly presented.
Even though they assess similar information, there are several key differences between an audit and a review. In a review, our CPAs provide limited assurance that there are no material modifications that need to be made to an entity's financial statements. Audits, on the other hand, can provide a reasonable level of assurance.
In an audit, our CPAs examine financial reports and processes in detail. A review requires less work than an audit, takes less time, and relies more heavily on information provided by management instead of gathering information independently. There are several phases to a review engagement.
We will initially work with you and your staff to obtain a level of knowledge of the accounting principles and practices of the industry in which your company or organization operates and to obtain a general understanding of these matters as they relate specifically to you. We are required to design and perform review procedures including inquiry of the client and analytical procedures designed to detect potential misstatements in the financial statements.
We place emphasis on plausible relationships among both financial and relevant nonfinancial information and comparing recorded amounts, or ratios developed from recorded amounts, to expectations developed from previous financial statements or industry standards.
Many contractors and other types of businesses need to provide financial reviews for bonding or lending purposes. Reviews are more affordable than audits, but they help lenders assess the financial state of a business.