Project Management Accounting: Budgeting, Tracking, and Reporting Costs and Profitability, Second Edition

Reports on Financial Statements

Another area that may be an indicator of your potential client's integrity and financial sustainability is the type of Auditor's Report that is attached to their financial statements. At the risk of over simplification, there are three classes of letters attached to a set of financial statements. They are:

1. Independent Auditors' Report

2. Independent Accountants' Review Report

3. (Independent) Accountants' Compilation Report

The different classes of accountant letters are indicative of the level of assurance on the respective company's financial statements that an independent certified public accounting firm stipulates. In other words the type of letter indicates how much work the accounting firm did relative to proving the accuracy of the financial statements presented.

The “Independent Auditors' Report” is the highest level of assurance and the “(Independent) Accountants' Compilation Report” is the lowest. There is specific and sometimes significant work that needs to be performed by the independent certified public accountants before rendering one of the aforementioned letters. The Independent Auditors' Report, Independent Accountants' Review Report, and (Independent) Accountants' Compilation Report are also referred to as an audit, a review, and a compilation, respectively. The higher the level of assurance by the auditor indicates the greater amount of work performed. The greater the amount of work required is directly proportionate to the ...