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Lane
Lane , JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9215
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Is there a basic template letter that I can provide to a client

Resolved Question:

Is there a basic template letter that I can provide to a client with a copy of the financials statements that we have produced on their behalf. They are presenting them to an attorney for an investment with his client. They want it to be known that a third party had prepared them. It is not an audit or a review
Submitted: 3 years ago.
Category: Finance
Expert:  Lane replied 3 years ago.

NPVAdvisor :

Hi,

NPVAdvisor :

Here's something that I pulled some years ago from a group of Word templates ... tell me what you think:

NPVAdvisor :


[Appropriate Salutation]



We have compiled, from information you provide, the [monthly, quarterly, or other


frequency] financial statements of XYZ Company as of and for the year ended


December 31, 20XX.



The objective of a compilation is to assist you in presenting financial infor-


mation in the form of financial statements. We have utilized information that is


your representation without undertaking to obtain or provide any assurance


that there are no material modifications that should be made to the financial


statements in order for the statements to be in conformity with [the applica-


ble financial reporting framework (for example, accounting principles generally


accepted in the United States of America)].



You are responsible for



a. the preparation and fair presentation of the financial statements


in accordance with [the applicable financial reporting frame-


work (for example, accounting principles generally accepted in the


United States of America)].



b. designing, implementing, and maintaining internal control rel-


evant to the preparation and fair presentation of the financial


statements.



c. preventing and detecting fraud.



d. identifying and ensuring that the entity complies with the laws


and regulations applicable to its activities.



e. making all financial records and related information available to


us.



We are responsible for conducting these statements in accordance with State-


ments on Standards for Accounting and Review Services issued by the American


Institute of Certified Public Accountants.



This compilation differs significantly from a review or an audit of financial state-


ments. A compilation does not contemplate performing inquiry, analytical pro-


cedures, or other procedures performed in a review. Additionally, a compilation


does not contemplate obtaining an understanding of the entity's internal con-


trol; assessing fraud risk; testing accounting records by obtaining sufficient


appropriate audit evidence through inspection, observation, confirmation, or


the examination of source documents (for example, cancelled checks or bank


images); or other procedures ordinarily performed in an audit. Accordingly, we


will not express an opinion or provide any assurance regarding the financial


statements being compiled.



These statements cannot be relied upon to disclose errors, fraud, or illegal acts.




__________________________________


[Signature of accountant]


Acknowledged:


XYZ Company


_______________________


President


_______________________


Date


NPVAdvisor :

And finally, here's an article woth some other good guidelines .. but I believe th template here, (above) should serve your purposes here

NPVAdvisor :

I still don't see you coming into the chat, so I'll move us to the Questions and Answer mode ... Maybe that will help (We can still continue a dialogue there, just not in real-time as here)

NPVAdvisor :

Let meknow if you have questions

NPVAdvisor :

Lane

Customer: replied 3 years ago.

It that the correct verbage for the conformity.....the financial reporting framework.....do I use what you said?

Expert:  Lane replied 3 years ago.

Hi,

If you don't feel, or are worried that you may not conform to GAAP or whatever you want to use as a standard, just take that out .. or again, use a standard that you feel safe the statements do comply with.

There's another similar statement that begins with"We are responsible..."

You can use or remove to the level that makes you comfortable ... you could also use a format statement rather than a standards statement, eg.,

"This is the format we use will all of our clients," or "We employ the format provided in the ABC accounting package," etc.

I think the hold harmless content is excellent... the conformity/standards statements can be (should be) changed to whatever your standard is... OR you don't have to speak to that at all.

Lane
Customer: replied 3 years ago.

Ok...so I do not have to say the financial statements conform to any accounting prinicples.

Customer: replied 3 years ago.

We just prepared it with the information provided by the client. It is not a formal Compilation and I do not want to seem like we put alot of our own effort into it. Does that make sense?

Expert:  Lane replied 3 years ago.

The compilation is really the most BASIC level of service when it come to financial statements.

... there are no assurances being made other than it conforming to AICPA standards

Again, If you're saying that this is even below Audit, Review OR compilation, then I guess you could just use the disclaimer bullets themselves.

I don't think there's really a standard for something less than that.

Lane


Lane and other Finance Specialists are ready to help you
Expert:  Lane replied 3 years ago.

Thanks as always!

Lane

Hope you're having a good one