CPA Clinic 3 : Alternative services for accounting or assurance

If my company meets the requirements for exemption from an audit, are there alternative services that I can engage for accounting or assurance purposes?

You can engage the service of a public accountant for compilation of financial information. This would usually include the preparation of financial statements, such as a balance sheet, profit and loss account and notes to the financial statements.

The job may also include the collection, classification and summary of other financial information for financial statement disclosure purpose.

The procedures employed are not sufficient to enable the public accountant to express any assurance on the financial information. That means, the public accountant will not say that the statements give "a true and fair view" for example.

Other services available would include "a review of financial statements engagement" and "an agreed-upon procedures engagement".

·         A review of financial statements engagement provides more assurance to other users of the financial statements as compared to the compilation of financial information alone.

In effect, this review gives a “negative assurance” as the public accountant will state whether anything has come to his attention that causes him to believe that the financial statements are not prepared in accordance with the financial reporting framework.
A company would ask for this service if it wanted to apply to a bank for a loan, for example.

·         Agreed-upon procedures engagement may involve the public accountant reviewing individual items of financial data, for example, accounts payable and sales of a segment of an entity, a financial statement such as a balance sheet or even a complete set of financial statements.

This engagement may be performed at a consignor’s request to check the balance of stock at an overseas warehouse, for example.

 As the public accountant simply provides a report of the factual findings of agreed-upon procedures, no assurance is expressed.

Users of these reports will have to assess for themselves the procedures and findings reported by the public accountant and draw their own conclusions from the public accountant's work.

For more information, go to the Institute of Certified Public Accountants of Singapore's website: www.icpas.org.sg or visit www.icpasresearch.org.sg for more online resources.