Year End Preparation Debbie Dane CPA CGA Auditor

Year End Preparation Debbie Dane, CPA, CGA

Auditor or Accountant? • Auditor: • “A person appointed and authorized to examine accounts and accounting records, compare the charges with the vouchers, verify balance sheet and income items, and state the result” • Accountant: • “A person concerned with the maintenance and/or audit of business accounts and the preparation of consultant reports in tax and finance”

Assurance Levels 1. Notice to Reader (Compilation) 2. Review Engagement 3. Audit

Notice to Reader (Compilation) Accountant compiles information provided by the company’s management team as the basis for the F/S • No audit or review procedures performed • No assurance is given to the validity of the F/S • No notes to the F/S • Independence

Sample Notice to Reader Report NOTICE TO READER On the basis of information provided by management, we have compiled the balance sheet and the statement of earnings and retained earnings. We have not performed an audit or a review engagement in respect of these financial statements and accordingly, we express no assurance thereon. Readers are cautioned that these statements may not be appropriate for their purposes .

Notice to Reader (Compilation) • Internal usage • Corporate tax return • Some lenders will accept

Review Engagement Accountant reviews information provided by the company’s management team and reports on the reasonableness of the financial statement data • Report is addressed to the Partners/Directors of the entity • Assurance • GAAP • No audit opinion is expressed • Independence • Inquiry, analytical procedures and discussion • Materiality • Documentation, Internal Controls • Confirmations

Sample Review Engagement Report To the Directors of ABC Company Ltd. : We have reviewed the balance sheet of ABC Company Ltd. as at December 31, 2014 and the statements of earnings, changes in equity and cash flows for the year then ended. Our review was made in accordance with Canadian generally accepted standards for review engagements and, accordingly, consisted primarily of inquiry, analytical procedures and discussion related to information supplied to us by the entity. A review does not constitute an audit, and consequently, we do not express an audit opinion on these financial statements. Based on our review, nothing has come to our attention that causes us to believe that these financial statements are not, in all material respects, in accordance with Canadian accounting standards for private enterprises (International Financial Reporting Standards).

Auditor expresses an opinion and gives assurance that the financial statements and disclosures are presented fairly and without material errors • Report is addressed to the shareholders • Assurance • Independent Auditor’s Report • GAAP • GAAS • Opinion • Audit procedures - validity of #’s and disclosures • Materiality, Risk • Documentation, Internal Controls • Confirmations • Audit Trail, Walk-throughs

Sample Audit Report INDEPENDENT AUDITOR'S REPORT To the Shareholders of ABC Ltd. : We have audited the accompanying financial statements of ABC Ltd, which comprise the balance sheet as at December 31, 2013, and statement of earnings, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for private enterprises (or IFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the ABC Ltd. as at December 31, 2014, and its financial performance and its cash flows for the year then ended in accordance with Canadian accounting standards for private enterprises (IFRS).

Be Prepared 1. Reduce internal preparation time and cost 2. Reduce accounting/auditing fees Timely PBC information received = less wait time Less re-work 3. 4. 5. 6. Address prior year audit recommendations Deadlines Reduced stress Communicate throughout year

Communication Accountant/Auditor: • Meet deadlines • Courteous and professional • Effectively plan • Including providing list of “PBC” documents • Communicate progress and issues Client • Don’t wait until year end • Stay current • Internal controls

Year End List Accessible data file or: • • • Trial Balance Sheet Income Statement General Ledger A/R List A/P List Bank statements and Reconciliations Details of new accounts Work in progress Prepaid expense listing Investment statements and T-slips New investment Capital asset purchases/leases and disposals

Year End List Bank loan Accrued liabilities listing Unearned revenue/deposits listing Mortgage loan statements Legal invoices Donation receipts Partnership Agreement – new or changes Schedule of partner contribution/draws Schedule of income allocated to partners Details of new and retired partners

Year End List Bank confirmation Mortgage confirmation Identification of related party transactions Various working papers – expenses, revenue, fluctuations Financial statements, including notes and disclosures

Year End List (Trust Audit) Bank statements Bank reconciliations Monthly trust listing/reconciliation Supporting documentation

Plan for Annual Visit • Co-ordinate schedule with accounting firm • Discuss effects of any new standards

Plan for Annual Visit • Determine primary contact, appointments • Communicate planned absences

Plan for Annual Visit • PBC list completion – documents and analyses • Discuss with staff • Know your numbers • Anticipate questions

Plan for Annual Visit • Workspace • File sharing • Tour • Be available for questions! Set parameters!

Questions?

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