1. Presented by, Stephen Mann, CPA/ABV

3. Accountants Report Balance Sheet Profit and Loss or Income Statement Statements of Cash Flows Notes to Financial Statements Supplementary Information

4. Compilation Review Audit Internally prepared

5. Generally Accepted Accounting Principles Who makes these things up? FASB Financial Accounting Standards Board Where can I find these Accounting Principles? www.fasb.org – sign up for free subscription to view standardswww.fasb.org Organized by topic for example Assets, Liabilities, Equity, Revenue, Expenses

6. CPA has prepared and read the financial statements Do not express an opinion nor provide any assurance about whether the financial statements are in accordance with accounting principles generally accepted in the United States of America. Financial Statements may not include Notes or Cash Flow Statement.

7. In addition to Compilation procedures CPA has performed procedures to obtain limited assurance there are no material modifications that should be made to the financial statements. Those procedures are typically Inquiry of management and Analytical review Management would provide CPA with a Representation letter.

8. CPA/Auditor expresses an opinion on the financial statements. Unmodified Opinion Modified Opinions –Qualified –Adverse –Disclaimer. Auditor selects procedures based on the auditors judgment, including the assessment of the risks of material misstatements of the financials statements. Auditor consider internal controls relevant to the preparation of the financial statements but does not express an opinion on the effectiveness of those controls.

9. External CPA not involved in preparation The Company generates the financial statements. Will likely not have a “report” May be organized differently or have more detail Typically used as a Management tool

10. Provide details of the Assets and Liabilities of the Company. Assets should be listed in order of liquidity cash, accounts receivable inventory, fixed assets, long term Note Receivables. Liabilities also listed in order of liquidity, accounts payable, accrued expenses, current portion of long term debt, and long term portion of long term debt. Equity is the difference between Assets and Liabilities, and shows the components of the Equity – Contributed Capital or Retained Earnings. Banks would look to the balance sheet to determine available collateral to support financing. Is typically used in the Valuation of a Company applying an Asset Approach.

11. All Revenue and Expenses of the Company Some expenses are non – cash items like Depreciation Look for relationships between Income statement and Balance sheet like Sales compared to Accounts Receivable Is typically used in the Valuation of a Company when an Income Approach is being used.

12. Typically is prepared using the indirect method. Where did all the money go? Reconciles net income to net change in cash. Three sections, Operating, Investing and Financing Ties the Balance sheet from beginning of the year to the end of the year together.

13. The notes provide a narrative explanation of the significant accounting policies used by the company and more detail about certain items Accounts Receivables, Fixed Assets, Long Term Debt, concentrations, subsequent events.

14. Not required Typically provides more details of summarized financial information found on the income statements. Example would be a line item list of the expenses that make up cost of goods sold or operating expenses.