Financial Statements Services in Canada
Does your business require financial statements prepared to meet requirements for external parties like investors and shareholders? Canadian tax professional Ltd experienced staff can help you determine what type of business financial statements in Canada best meets your needs. We can guide you through the process and help provide clarity to the readers of your business financial statements. A Notice to Reader Financial Statement is a financial statement compilation engagement prepared by Professional Accountant providing no assurance (and provides no opinion). The business financial statement has not been audited or reviewed, therefore it does not have the level of reliability associated with audits or review engagements. When firms offer no assurance on financial statements that they prepare or assist in preparing, they issue a Notice to Reader Financial Statement report. It is still likely to be far superior to a business financial statement produced by an uncertified bookkeeper using accounting software. This is because the overall standards and experience of Accountant play a significant part in the process of preparing the business financial statements. The bookkeeper does not normally ensure that the accounts used to classify transactions are appropriate, and also does not usually enter transactions that are outside the daily routine of sales invoices, purchase invoices, cheques received and cheques issued. Since the chartered accountant simply compiles the business financial statements based on the information provided by the client, this service is also referred to as a Compilation Engagement.
When providing a notice to reader financial statement, Professional Accountant firms must still comply with professional standards and abide by basic accounting principles. Despite providing no level of assurance on business financial statements, the accountant must apply professional judgement and consider the reasonability of the information provided by the client. Should the Professional accountant conclude the information is not reasonable, then the business financial statements cannot be prepared based on the data provided. The Professional accountant’s concerns must be satisfied for new financial information made available for the notice to reader financial statement or notice to reader report.
There are many misconceptions regarding business financial statements and obtaining a notice to reader report or notice to reader financial statements:
- A lot of small business owners feel they can operate their organization without reviewing business financial statements. These owners believe business financial statements are used to send them to the government or for corporate tax return purposes. However, one of the main reasons of producing reliablenotice to reader financial statements is to ensure there is no overpayment of corporate taxes as a result of overstated income.
- Bookkeeping software has many functions but unfortunately the software cannot produce or issue anotice to reader financial statement. The business accounting software packages are designed to easily produce monthly or quarterly financial statements. Business owners should be reviewing these financial statements to highlight problem areas before any significant issues arise. For example, unusually high advertising expenses in the third quarter should indicate to the owner to better manage spending for the rest of the year.The Professional Accountant in Toronto does not usually produce Notice to Reader financial statements until the end of the fiscal year. Professional Accountants in Toronto helps a company to stay on budget during the course of the year by using the notice to reader financial statements to highlight areas of improvement.As Professional Accountants in Toronto, our firm follows the following processes when preparing year-end financial statements on a Notice to Reader basis:
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- Obtain thetrial balance, a summary of all transactions recorded into the bookkeeping software from the bookkeeper for the company’s fiscal year-end.
- Scan the company’schart of accounts to observe anything that may be in error or missing from the accounts.
- Prepare adjusting journal entries to correct any errors or omissions made for thenotice to reader financial statements. Some examples of adjusting entries for the notice to reader financial statements are:
- depreciation of fixed assets
- Accrued expenses<
- Group accounts that adjusting entries have been made to and include it into the notice to reader financial statements.
- The notice to reader financial statements are used for corporate tax returns.
- Finalize the corporate income tax returns. The tax impact shown on the tax returns is reflected back onto the notice to reader financial statements with a final adjusting entry.
