The balance sheet is the statement of financial position—assets, liabilities, and shareholders’ equity—at a specific point in time. For tax returns, this would be the fiscal year-end of the corporation.
As part of your bookkeeping package, we’ll also prepare the following unaudited year-end financial statements for submission with your corporate tax return:
Before finalization, certain year-end adjustments are required to your financial statements. These adjustments may include:
This could include work in progress—income that has been earned but not yet invoiced for. An example would be labour hours for a project that hasn’t been completed.
Some examples of expense adjustments are:
While the financial statements we prepare are suitable for internal use and for tax purposes, other external users of the financial statements, such as banks or other creditors, company shareholders, or prospective purchasers of a business, may require some degree of assurance that the financial statements are accurate.
A compilation (Notice to Reader or NTR) provides virtually no assurance, other than the fact that the financial statements were compiled by a CPA firm. The NTR generally states, “We have not performed an audit or a review engagement in respect of these financial statements and, accordingly, we express no assurance thereon.”
Even though there is no assurance given, financial statements compiled by a CPA firm may be sufficient for some external users of the statements.
A review also does not provide any level of assurance other than:
Reviewed financial statements are generally sufficient for banks, other creditors, and some other external users.
Audited financial statements are in most cases only required by large, public companies or non-profits. They do provide a degree of assurance by stating, “In our opinion, the financial statements present fairly, in all material respects, the financial position of XYZ.”