Attestation services play a crucial role in accounting processes. The need for independent parties to give assurance over topics other than financial statements is required by laws, service clients, and even regulators. Attestation services are crucial in many scenarios and important for businesses, financial institutions, and investors. Although there are countless reasons for seeking these services, let us first discover what they are.
What Is an Attestation Service?
Attestation services include reviews, financial statement audits, and compilations performed by a certified public accountant or CPA. During attestation services, accounting professionals may examine the following:
- Accuracy and completeness of financial data
- Regulatory compliance
- Internal accounting procedures and controls
- Organizational governance
Since an attestation is an independent examination, your business’ CPA cannot carry out an attestation for you, even when the accountant has prepared financial statements that follow all rules and guidelines. An outside CPA must perform attestation services. The independent CPA will deliver an attestation report with conclusions regarding the reliability of your financial statements and operations.
The American Institute of Certified Public Accountants (AICPA) develops and publishes standards for attestation services. These standards outline the appropriate processes for conducting audits, compilations, and reviews, as well as best practices for reporting attestation findings. These standards include guidelines for presenting adverse opinions, which are documented when an auditor believes a company’s financial statements are inaccurate or willfully misrepresented.
When Do You Need Attestation Services
Businesses may require attestation services for different reasons. The most common reasons that you can hire a certified public accountant for attestation services include the following:
- Applying for Bank Loans: Small businesses require attestation services when applying for bank loans. The attestation doesn’t need to be an all-encompassing financial audit. A simple compilation of the business’ numbers or review-level examination by a CPA can come in handy and help you get approval for your bank loan.
- Assuring Investors of Reliability of Finances: Investors typically demand transparency, reliability, and an in-depth understanding of your internal controls. Before pouring money into your business, investors want to know your financial health. Investors need attestation services to guarantee the reliability of the company’s financial data and statements through examination by a dependable third-party CPA. With attestation services, businesses can meet the expectations of their investors by ensuring the accuracy and completeness of the information found in the company’s financial statements.
- Selling your Business: When selling your company, you may require a financial audit. This attestation service will thoroughly evaluate your business assets and confirm whether your financial statements have any significant errors.
Final Thoughts
Attestation services are important for all businesses, regardless of size. Attestation engagements such as audits, reviews, and compilations offer companies the possibility of gaining assurance over a wide range of topics, from the accuracy of financial statements to the efficacy of accounting controls. This assurance is vital for businesses, allowing them to operate with confidence and identify areas for improvement.