A CPA can issue one of three types of reports on the financial statements of the association: a compilation, a review or an audit.
Audit An audit is one of the most significant and comprehensive services a CPA can provide. The CPA expresses an opinion about the fairness of presentation on the associationís financial statements. The CPA conducts the audit in accordance with generally accepted auditing standards and provides reasonable assurance that the financial statements are not materially misstated. An audit also includes examining and testing evidence that supports the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by the association; and evaluating the overall financial statement presentation.
Review A review consists principally of inquiries of the associationís management and the application of analytical procedures to the financial data obtained from the business. The purpose of a review is to obtain a basis for expressing limited assurance that no material modifications are necessary in order for the financial statements to be in conformity with generally accepted accounting principles (GAAP). The limited procedures applied in a review make the report somewhat more reliable than a compilation, but substantially less than an audit.
A compilation involves placing financial data obtained from the association into a financial statement format. The CPA does not express an opinion or any other form of assurance on the financial statements.