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Financial Services, Income Tax Planning,
Personal, Corporate & Trust Tax Returns, Financial Statement Preparation


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Why a CA?


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CA Services For Your Business

A Chartered Accountant's signature is synonymous with objectivity, reliability, and credibility. A CA is a proven financial expert.

A CA's signature on an audit report means the CA has conducted an examination of an organization's books and has expressed an informed opinion on the fairness of the financial information. It is important for you to know that not all financial statements are audited. Many small businesses do not need an audit. Their reporting needs can be met by other means, as described below.

Whether or not a CA is required to perform an audit or a review, those who read the financial statements and the accompanying communications should note the accountant's professional status. Readers can trust that a Chartered Accountant has the highest standards and professional status. Readers also trust the competency and professionalism found in a Chartered Accountant.

Chartered Accountants are proven management and business advisors as well as financial experts.

Financial Statements

It is management's responsibility to prepare financial statements.

However, in some cases, organizations that do not have financial expertise may engage the services of a Chartered Accountant to prepare financial statements on their behalf.

Fiscal year financial statements prepared for a company or other organization in accordance with *generally accepted accounting principles (GAAP) normally include:

  • a balance sheet, which shows assets and liabilities as at the year end,
  • a statement of earnings, which shows the results of operations for the year,
  • a statement of retained earnings, which shows the changes in equity during the year,
  • a statement of cash flows, which shows operating, investing, and financing activities and how these activities effect the cash position, and
  • notes to the financial statements, which are an integral part of the financial statements, and which provide additional explanations and details concerning financial statement items.

As well, there may be schedules attached which can provide even more detailed information relating to items disclosed in the financial statements.

* Generally accepted accounting principles are independent standards set by the CA profession for Canadian businesses.

There Are Three Types of Reports

Chartered Accountants provide each of these services in association with financial statements:

1. an audit;
2. a review; or
3. a compilation engagement.

Each of these services provide a different level of credibility to the financial statements. With each service, the Chartered Accountant provides a different report, which report communicates the extent of work performed and the degree of responsibility that the CA accepts.

Nature of Engagement Nature of Involvement Report Provided Level of Assurance Provided
Audit Application of generally accepted auditing standards in support of each significant financial statement item Auditor's Report Reasonable Assurance
Review Application of generally accepted standards for review engagements (enquiry, analytical procedures, and discussion with management ) Review engagement report Plausibility
Compilation Limited to compiling, in the form of financial statements of data provided by management Notice to Reader Not false or misleading

A Chartered Accountant's involvement with financial statements lends a different level of credibility to the financial statements, depending on the nature of the CA's involvement.

Standards and procedures for audits, reviews, and compilations are established by the Canadian Institute of Chartered Accountants (CICA). The CICA Handbook prescribes generally accepted accounting principles and generally accepted audit and review standards for Canadian companies and other organizations.

As the the amount of work performed with each service is different, the cost to perform these services varies accordingly.


Service: Audit / Report: Auditor's Report

The Auditor's Report provides the highest level of assurance to readers.

Incorporated businesses over a certain size are required to present annual audited financial statements to shareholders. The law allows some smaller companies to waive an audit provided they meet certain conditions.

An audit of financial statements by an independent CA may be required for various reasons. For example, an audit may be necessary when negotiating the purchase or sale of a business, or a company's banker may require an audit to support an application for financing.

An auditor of a corporation is responsible to the shareholders. On behalf of the shareholders, an auditor examines the company's financial records and operations to determine whether the information reported in the financial statements is presented fairly. The CA then communicates this assessment to shareholders through the expression of an audit opinion.

It is important to remember, that, in the final analysis, management is the one responsible for the preparation and release of the financial statements.

Below is a sample of an unqualified Auditor's Report.


1) To the Shareholders of (COMPANY NAME)

2) I have audited the balance sheet of (COMPANY NAME) as at (Date) and the statements of earnings, retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit.

3) I conducted my audit in accordance with generally accepted auditing standards (4). Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, (5) evidence supporting the amounts and disclosures in the financial statements. An audit also includes (6) assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

(7) In my opinion, these financial statements present fairly, in all material respects (8), the financial position of the company as at (DATE), and the results of its operations and its cash flows for the year then ended, in accordance with generally accepted accounting principles (9).

Anytown, Anyprovince
Date (10)


Explanation of the Contents of the Auditor's Report

(1) ADDRESSEE - The auditor's report is addressed to the shareholders because, in corporate audits, they are the primary group to whom the auditor is responsible. With other organizations, the auditor's report is addressed as deemed appropriate (for example, to the members re non-profit organizations).

(2) INTRODUCTORY PARAGRAPH - The financial statements being reported on are identified. The responsibilities of management and the auditor regarding the financial statements are explicitly stated. The date is the organization's year end.

(3) SCOPE PARAGRAPH - A description of the audit examination is provided.

(4) GENERALLY ACCEPTED AUDITING STANDARDS (GAAS) - These standards require that those performing the audit have adequate technical training and proficiency in auditing. The examination should be planned and performed with due care and with an objective state of mind. The standards also require that sufficient evidence is obtained during the audit to support contents of the financial statements. This evidence is acquired through






computation, and


These standards are developed and published in the CICA Handbook.

(5) ON A TEST BASIS - The auditor does not undertake a verification of all transactions but applies independent professional judgement to determine the nature, extent, and timing of tests to be carried out on the transactions.

(6) ASSESSING AND EVALUATING - The auditor makes judgements in applying GAAS regarding management's application of accounting principles and financial statement presentation.

(7) OPINION PARAGRAPH - The auditor does not present a statement of facts. The audit results in an informed professional opinion based on an the assessment of the internal controls, an examination, on a test basis, of the organization's's accounting records, as well as other supporting evidence.

(8) PRESENT FAIRLY IN ALL MATERIAL RESPECTS - The information in the financial statements requires estimates and judgements to be made with the objective being to present fairly. In the auditor's opinion, estimates and disclosures, although not exact, and subject to some differences of opinion, do not mislead informed readers in any material way.

(9) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) - The manner of recording and measuring transactions and the methods of classification and presentation are based on basic concepts of accounting. Canadian standards are developed and published by the CICA. Any significant item that has not been properly treated or disclosed on a consistent basis in accordance with those principles must be mentioned in the audit report as a qualification of the auditor's opinion.

(10) DATE - The date indicates the date up to which the auditor sought evidence to support the opinion expressed in the auditor's report.

(11) CHARTERED ACCOUNTANT - Regulation of who may perform audits in Canada is a provincial matter. In some provinces, only a Chartered Accountant can perform audits because of the CA's very high standards of training and performance. Consequently, readers should check to ensure the auditor has met the highest standards, i.e. the CA credential.

Service: Review / Report: Review Engagement Report

A review is not as extensive as an audit, but it is more extensive than a Notice to Reader report, and therefore, provides less assurance and credibility to the financial statements.

A review consists primarily of enquiry, analytical procedures, and discussion related to information supplied to th CA. They are useful for companies not legally required to file audited financial statements. This type of report is useful when a company doesn't need audited financial statements, but management or third parties, for example, banks, want some assurance that the financial statements are plausible.

The Chartered Accountant reviews the financial statements in accordance with established professional standards. If the CA discovers the financial statements deviate from generally accepted accounting principles (GAAP), this fact is disclosed in the review engagement report.

Plausibility is the guide for the CA in preparing a review engagement report. The CA accepts financial information from the client, and then applies generally accepted standards for review engagements to determine the plausibility of the financial information. It must appear plausible based on the CA's knowledge of the client's operations and the industry, and based on the procedures performed by the CA.

The following is a standard Review Engagement Report.

Review Engagement Report

(1) To (person engaging the Chartered Accountant)

(2) I have reviewed the balance sheet of (COMPANY NAME) as at (DATE), and the statements of income, retained earnings and changes in financial position for the year then ended.(3)My review was made in accordance with generally accepted standards for review engagements and, accordingly, consisted primarily of enquiry, analytical procedures and discussion related to information (4) supplied to me by the company.

(5 ) A review does not constitute an audit and consequently I do not express an audit opinion on these financial statements.

(6) Based on only my review, nothing has come to my attention that causes me to believe that these financial statements are not, in all material respects, in accordance with generally accepted accounting principles.

Anytown, Anyprovince
Date (7)

Explanation of the Review Engagement Report

(1) ADDRESSEE - The review engagement report is usually addressed to the person who engaged the accountant.

(2) IDENTIFY STATEMENTS - The financial statements prepared by management and reviewed by the Chartered Accountant are identified.

(3) NATURE OF REVIEW - The scope of the CA's review is described.

(4) THE SOURCE OF THE INFORMATION IS IDENTIFIED - The source of information used in preparing the financial statements, and on which the financial statements are based, is identified.

(5) IT IS STATED NO AUDIT IS PERFORMED AND NO OPINION IS GIVEN - The CA clearly states that no audit was conducted and that audit evidence was not obtained on each financial statement item, that. therefore, no audit opinion is expressed.

(6) NEGATIVE ASSURANCE - This form of reporting informs the reader that a review was completed in accordance with CICA standards. Although sufficient evidence was not obtained to allow the CA to express an audit opinion, nothing has come to the CA's attention that causes the CA to believe that the information being reported on is not, in all material respects, in accordance with GAAP.

(7) DATE - The date indicates the date up to which the CA has reviewed the corporate activity to support the negative assurance opinion being expressed on the review engagement.

(8) CHARTERED ACCOUNTANT - The regulation of who can perform reviews in Canada is a provincial matter. In some provinces, only Chartered Accountants can perform reviews because of their high standards of training and performance. Consequently, readers should check to ensure the review engagement accountant has met the highest standards, i.e. does the review engagement accountant have a CA Credential

Service: Compilation / Report: Notice to Reader

A compilation engagement provides no assurance.

For this type of report, the CA compiles the financial statements on behalf of management from information provided by the client. It is not necessary to adhere to generally accepted accounting principles.

Sometimes estimated financial information is all the client needs (e.g. estimated inventories for monthly management statements). Sometimes even incomplete information will suffice (e.g. some accrued expenses may be overlooked for monthly management statements). Owners, management, and any third party users agree there's no need for a review engagement to determine plausibility, or an audit examination to ensure fairness.

The CA's responsibility for a compilation is to "compile" financial statements from information provided by the management. The CA doesn't attempt to test accuracy or completeness of information provided, or attempt to determine whether there are departures from generally accepted accounting principles. No expression of assurance is contemplated in a compilation engagement.

The following is an example of the Notice to Reader communication used with compilation engagements.

Notice to Reader

(1) I have compiled the balance sheet of (COMPANY NAME) as at (DATE), and the statements of earnings, retained earnings, and cash flows for the (PERIOD) then ended from information provided by management. (2) I have not audited, reviewed, or otherwise attempted to verify the accuracy or completeness of such information.(3) Readers are cautioned that these statements may not be appropriate for their purposes.

City, Province



(1) NATURE OF ASSIGNMENT - -Reference is made as to what work the Chartered Accountant did (i.e. compiled the statements from information supplied by management or the proprietor - the CA did not audit or review the statements).

(2) SCOPE LIMITATIONS - It is clearly stated that the CA's work was limited and did not include an audit or review to assess the accuracy or completeness of the financial information. There is no form of assurance implied by the CA, or expressed by the CA on the financial statements.

(3) CAUTION TO READERS - Since it is management or the proprietor, not the Chartered Accountant, that determines the distribution of the financial statements, it is necessary to convey a caution to readers. The statements may not be appropriate for the users' purposes.

(4) CHARTERED ACCOUNTANT - Compilation services are not regulated in most provinces. Thus, checking that the compilation was carried out by a CA provides comfort that it was prepared by the most qualified professional accountant.


Contact me For All Your Business And Personal Accounting, Auditing or Taxation Needs!

Herb Kokotow, Chartered Accountant
3 German Mills Road, Thornhill, Ontario, Canada, L3T 4H4
Telephone:(905) 764-6175 or

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