Types of Reports Issued
The type of accountant’s report accompanying your financial statements depends upon the level of assurance required. The three types of reports are:
- Notice to Reader
- Review Engagement Report
- Auditors’ Report
Notice to Reader
A Notice to Reader report requires the Chartered Professional Accountant to compile ﬁnancial statements based on the information provided by a client. This service usually involves assistance with bookkeeping, posting adjusting entries and preparing the annual tax return. Chartered Professional Accountants are required to comply with professional standards and abide by basic accounting principles.
A Review Engagement Report is issued when required to meet bank, investor or statutory requirements. Limited assurance is provided as the Chartered Professional Accountant considers the plausibility of the information provided using limited procedures. The procedures utilized by the Chartered Professional Accountant primarily consist of discussion and inquiry of the client and analytical procedures to assess the plausibility of account balances. Once plausibility is established, the accountant issues a Review Engagement Report accompanying the financial statements.
In addition to the Review Engagement procedures, the Chartered Professional Accountant also performs substantive procedures and obtains an understanding of the clientʼs system of internal controls. This is a more detailed process than a review, which enables the Chartered Professional Accountant to provide the highest level of assurance through the issuance of an Auditorsʼ Report, which states that the companyʼs ﬁnancial statements are fairly stated and in accordance with generally accepted accounting principles (“GAAP”).
Choosing the Right Engagement for Your Business
The choice of engagement type is primarily driven by the users of the ﬁnancial statements. Those providing capital often require clients to provide ﬁnancial statements that have some level of assurance. This can include bank loans, government grants, contribution agreements, private loans or even the issuance of public equities or debentures. Partnerships and other joint ownership arrangements may also require assurance as a way of ensuring that bonuses, salaries and cash are allocated and utilized as agreed upon.
Assurance Provides a Number of Benefits, Including:
- Increased ﬁnancial statement reliability
- Reduced risk of ﬁling an incorrect or inaccurate Corporate Tax Return
- Enhanced ﬁnancial statement credibility, which is important if a client plans to:
- seek ﬁnancing from a third-party
- entirely or partially divest shareholdings
- request some form of government ﬁnancing or grants
- issue securities or debentures to the public
Those Requiring No Assurance
Those not seeking assurance can choose a Compilation Engagement that allows an accountant to ﬁle your corporate tax return and provide related taxation planning. In addition, the client can consult us for management, bookkeeping, payroll and other business advice.
Future-oriented Financial Information (“FOFI”)
Future-oriented financial information is prepared by the Chartered Professional Accountant with assistance from management. A FOFI is a financial projection/forecast primarily utilized to obtain financing for business growth or business start-up. All Chartered banks require a FOFI when financing proposals are presented.
Management is responsible for the integrity and objectivity of the information used to prepare future-oriented financial information and for the underlying hypothesis and assumptions on which such information is based. Assumptions and estimates are based upon information available and known to management at the time of development and reflect current business and economic conditions.
Regardless of what point in the business cycle you may require financing, it can prove to be a time consuming and stressful process that diverts your attention from the management of your business. As Chartered Professional Accountants we have experience in dealing with bankers, other financial institutions and lenders for financing proposals. As a result of our experience, we are able to manage and prepare the required deliverables necessary for your financing proposal for prospective lenders. This frees your time and resources to manage operations, compile a plan of action for the funds raised or other important objectives to sustain and grow your business.
Budgeting is a crucial tool, often over-looked by most owner managers, for successful financial, operational and strategic management of a business. A Chartered Professional Accountant can assist to create a detailed budget for the next fiscal year to aid management in monitoring and evaluating sales targets, margins and general and administrative expenses. The budgeting exercise proves to be a valuable tool for an owner manager in making informed decisions on what and the amount to be spent on business related expenditures; providing insight on profitability.
Benchmarking and Industry Analysis
As Chartered Professional Accountants we have the ability and tools necessary to benchmark our business clients to other businesses in the same industry across North America. This benchmarking exercise provides value to clients as it compares them to their peers to determine if margins and expenses as a percentage of sales are too high-or-low, and provides insightful analysis of key financial ratios. Based on your positioning relative to your peers in the industry we provide a detailed analysis of what your business can do to improve sales, increase margins and improve key financial ratios.
Whether you are on the buy-side or sell-side of a transaction, the other party to the transaction has emphasis on maximizing their value. Through our experience dealing across various industries in public accounting we have gained the expertise required to successfully value businesses for buy-side or sell-side transactions.
Reporting to Lenders
Often times owner managers become consumed in their day-to-day operations, that reporting covenants for loans are over-looked. When securing financing from lenders there are often financial reporting covenants which vary in reporting form and frequency. We are experienced in composing the required assessment and commentary to satisfy such reporting requirements imposed by financial institutions or other lenders. Our review provides for better flow of information to lenders to facilitate informed decision making on their part regarding outstanding loans and allows for us to ensure that information provided is sufficient to comply with stipulated financial reporting covenants.
Tax Planning for the Owner Manager
We strive to provide the best tax planning advice possible by tailoring a plan suited to your needs by employing tax deferral and minimization strategies available for corporate and personal taxes. As Chartered Professional Accountants we plan for your taxes ahead of time so you as an owner manager can factor in taxes in your operational and strategic decision making while understanding the impact on taxes payable personally and through your corporation(s). We have many tax planning techniques at our disposal which can be applied effectively for an owner manager.
Wealth, Succession & Estate Planning
We work with business owners and their families well in advance of transitioning their business to future generations or selling the business to a third-party.
The transition includes, but is not limited to:
- identifying the successor(s)
- roles of key management during the transition
- the distribution of ownership
- the mechanics for the transfer of shares
- taxation and legal considerations
- financial considerations
- retirement considerations
- dealing with disputes and problems
- a timetable
- a contingency plan
We work closely with management to ensure they understand the transition process and tax implications for a sale or a transfer of their business. Our network of trusted advisors assist in making the transition as smooth as possible.
Corporate Tax Compliance
We prepare and file annual corporate tax returns for our corporate clients for corporations residing across all Canadian provinces and territories.
Personal Tax Compliance
We prepare and file annual personal tax returns for our entire corporate client group. However, if you are self-employed or have complex personal tax matters please give us a call to discuss your unique tax situation. We have experience in dealing with various personal tax matters.
Indirect Sales Tax (GST, HST, PST)
We prepare, review and file monthly, quarterly and annual GST, HST and PST returns. In addition, we manage GST, HST and PST audits to provide you the time and focus on what matters most, your business.
Canada Revenue Agency (“CRA”) Audits
We manage all corporations and individuals with any outstanding CRA matters. We can manage in responding to the CRA regarding any audit requests so you can focus on what matters most, managing your business. We have a network of professionals, which includes Tax Lawyers, for matters that require escalation to Tax Court.
We have an experienced team of bookkeepers that can assist our small-to-medium sized business clients with their bookkeeping needs. For our operational and growth focused business clients our bookkeepers will visit your offices personally to provide on-site bookkeeping services. This will allow the owner manager focus on their business and our team of professionals to worry about the tax and accounting compliance.
Payroll Processing and Remittances
We process weekly, bi-weekly and monthly payroll for small-to-medium sized businesses ensuring that the appropriate source remittances are paid to the Canada Revenue Agency along with applicable Workplace Safety and Insurance Board (“WSIB”) and Employer Health Tax (“EHT”) in a timely manner.