Duluth GA CPA Sample Engagement Letter for Compilation Reports
Duluth GA CPA Sample Engagement Letter for Compilation Reports
CPA Serving Atlanta Georgia and Beyond
My goal is to always have an open, honest, and forthright relationship with all of my clients. To that end I have listed below the sample engagement letter a client will receive if they retain my firm for compilation services. As with all of our correspondence and services we are an “open book” and invite all questions and clarification. Accordingly please find below a sample engagement letter when compiled financial statements might be issued:
To:_____________________________________ Date______________
_____________________________________
_____________________________________
_____________________________________
Dear _______________________
This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services I will provide.
I will perform the following services:
I will compile, from information you provide, the balance sheet and related statements of income of _____________________________________ for the year ended ______________________. I will not audit or review such financial statements. Our report on the annual financial statements of the company is presently expected to read as follows:
I have compiled the accompanying Statement of Assets, Liabilities and Shareholder’s Equity – Income Tax Basis of _______________________(an S corporation) as of ____________ and the related Statement of Revenues and Expenses and Retained Earnings-income tax basis for the year then ended in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. These financial statements have been prepared on the income tax basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles.
A compilation is limited to presenting information in the form of financial statements that is the representation of management. I have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures ordinarily included in financial statements prepared on the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s financial position and results of operations. Accordingly, these financial statements are not designed for those who are not informed about such matters.
The company, with the consent of its shareholders, has elected under the Internal Revenue Code to be an S corporation. In lieu of corporation income taxes, the shareholders of an S corporation are taxed on their proportionate share of the company’s taxable income. Therefore, no provision or liability for Federal Income Taxes has been included in these financial statements.
If for any reason, I am unable to complete the compilation of your financial statements, I will not issue a report on such statements as a result of this engagement. I will also prepare the federal and state income tax returns for the company for the above year ended.
You agree that in connection with my performance of non-attest services, you will:
1. Make all management decisions and perform all management functions,
2. Designate an individual who possesses the skill, knowledge and experience, preferably within senior management, to oversee the services,
3. Evaluate the adequacy and results of the services
4. Accept responsibility for the results of our services, and
5. Establish and maintain internal controls, including monitoring ongoing activities related to the services.
Our engagement cannot be relied upon to disclose errors, fraud, or illegal acts that may exist. However, I will inform you of any material errors and any evidence or information that comes to our attention during the performance of our compilation procedures, that fraud may have occurred. In addition, I will report to you any evidence or information that comes to my attention during the performance of our compilation procedures regarding illegal acts that may have occurred, unless they are clearly inconsequential.
A compilation does not contemplate obtaining an understanding of internal control or assessing control risk, testing of accounting records and responses to inquiries by obtaining corroborating evidential matter, and certain other procedures ordinarily performed during an audit. Thus a compilation does not provide assurance that I will become aware of all significant matters that would be disclosed in an audit. All working papers of our engagement remain the property of His CPA, P.C. and constitute confidential information. Any requests for access to our working papers will be discussed with you before making them available to requesting parties. It is our policy to keep work papers related to this engagement for four years. When your records are returned to you, it is your responsibility to retain and protect your records for possible use, including potential examination by any government or regulatory agencies.
It is our understanding that our report is intended for your use and benefit. I am not aware of any other persons, entities, or limited groups of persons or entities for whose use or benefit this report is intended or contemplated. In the event that, during the term of this engagement, you decide to provide a copy of the compiled financial statements to a particular person or entity in connection with a contemplated transaction, you have agreed to notify us in writing prior to the issuance of the report of the identity of such person or entity and the size and nature of the contemplated transaction. You further agree that you will not reproduce my report for any reason without obtaining my written consent.
In the event of a dispute over our engagement, we mutually agree that any dispute that may arise in connection with our engagement will be submitted to mediation by selecting a third party to help us reach an agreement. We acknowledge that the results of this mediation will not be binding upon either of us. The costs of the mediation will be shared equally by both of us. If I incur legal fees as a result of our reliance on any false representation by you, you agree to reimburse us for all of our legal fees and related costs of defense.
There is the risk that potential errors and fraud can occur that can result in damages that may be several times the amount of our fees. In order to induce us to accept this engagement, you hereby agree that our liability for any negligence errors or omissions committed by us will be limited to one times the amount of our compilation fees. Further, you agree that any suit or counterclaim based on this engagement must be initiated within twelve months after the performance of my services.
This will confirm that all of our work will be done at our standard hourly rate of $185 per hour, that invoices are due upon receipt, that finance charges at the rate of two percent per month and collection fees are due on all unpaid monies, and that you personally guarantee payment of all invoices.
I appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. If the foregoing is not in accordance with your understanding, please notify me in writing within five business days of the date of this letter. If you have any questions, please let me know.
Very truly yours,
John C. Dillard, C.P.A.
President
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Romans 1:1 “Paul, a servant of Christ Jesus, called to be an apostle and set apart for the gospel of God.”
Written by author John Dillard CPA of His CPA at 770 814 9304 and visit http://www.hiscpa.com/ (a Christian CPA firm). At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”
We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.
Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock, Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain.
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