Audit, Review, Compilation: You know the difference. With bonding companies, you need certain financial statements (FSs) at specific times. But there is one FS you don't know about, and it can be very helpful! Audit: This is the highest level of CPA (Certified Public Accountant) presentation. The CPA provides a cover letter stating they have checked over the numbers and believe they are accurate. Review: This is the middle level. The CPA does some checking, but less than an audit. Compilation: This report has a disclaimer letter. It says the FS is the presentation of management - meaning the CPA does not vouch for the numbers. Other than CPA prepared statements, you could run into one by a Public Accountant, or a bookkeeper. There are also Internally Prepared statements produced directly by the customer, such as with QuickBooks. Then there is this Secret One you probably don't know about. It can be a strategic help and will not be suggested by the accountant. It's up to you to ask for it! We call it a "Confirmed Internal FS." This document is an internal FS, such as QuickBooks, but with an important upgrade. When obtaining a Confirmed Internal Report, the president or company owner is required to sign and date the company Balance Sheet (or maybe every page of the document) and write "Confirmed." This is an affirmative statement that the FS has been scrutinized. It is a document with greater credibility, because someone is taking responsibility for it. (Read Secret #5 about the role confidence plays in bonding.) Here is a real life example of how beneficial the Confirmed Internal FS can be. This week we are issuing a P&P bond in excess of $8 million for an applicant with a 12/31 fiscal year-end. Obviously, the CPA report is not available yet. However, before issuing the bond, we must get a read on their financial picture. How did the year turn out? We can't get the CPA report yet, but an internal FS is available. Can the underwriter base a decision on this document? That depends on whether the surety has the flexibility to give an approval in the absence of a CPA Audit or Review (Many underwriters are bound by strict rules that tie their hands.) Fortunately, we were able to proceed based on the confidence that the business owner reviewed and Confirmed the financial statement. He signed his name and went on record, "You can rely on these numbers." To us, that makes a big difference! Steve Golia is the National Surety Director for Great Midwest Insurance Company, an A-8 carrier specializing in contract surety. The company provides Performance and Payment Bonds with speed and creativity, up to $10 million per contract. Contact us today and let's discuss how we can help - even if others have failed. Call 856-304-7348. Visit us Click! Article Source: http://EzineArticles.com/9870415
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