Areas of Specialization
In our Audit Department, our focus is on providing audit, tax, and consulting services to Exempt Organizations. Our not-for-profit practice specializes in entities organized under Section 501(c) of the Internal Revenue Code. Since our inception in 1990, we have performed hundred of audits and have prepared thousands of tax returns for exempt organizations, including performing arts groups, animal welfare organizations, land management trusts, museums, chambers of commerce, schools and care facilities, and others.
Our Tax Department prides itself on timely and responsive service for individuals, trusts, partnerships, corporations, estates, and nonprofit organizations.
Types of Service
An audit is the highest level of service available from a CPA firm. It includes independent verification of the company’s assets, liabilities, revenues and expenses. Auditing procedures include confirmation with third parties, visual inspection of documents, recalculation of important financial ratios and percentages, analytical review, inquiry and observation, and a variety of other procedures designed to verify financial data and to test the integrity of the internal control environment.
An organization may be required to have an audit for any number of reasons: (1) to satisfy the audit requirements under the California Nonprofit Integrity Act, (2) to comply with a bank lending agreement, (3) to satisfy a government contract or agreement, (4) to obtain third-party insurance coverage, or (5) to establish a series of audited financial statements in an effort to ensure continued annual support from Foundations. Or, an organization may decide to have an audit simply because it desires the in-depth testing and validation procedures which an audit provides.
For whatever reason, when your organization requires an independent audit opinion on its financial statements, we will conduct an efficient and cost-effective audit with an emphasis on understanding the unique characteristics of your operations. We will assist you in the presentation of your financial statements, supplementary schedules, footnotes, and any other required disclosures.
Our audits are conducted in accordance with generally accepted auditing standards (GAAS). We ensure that the financial statements utilize generally accepted accounting principles (GAAP) as promulgated by the American Institute of Certified Public Accountants (AICPA). Because an audit does not involve 100% verification of every transaction, we utilize non-statistical audit sampling techniques as permitted by Statement on Auditing Standards.
We specialize in the audit of not-for-profit organizations subject to the provisions of section 501(c)(3) of the Internal Revenue Code. Accordingly, we follow accounting pronouncements FASB ASC 958.205, ASC 958.605, ASC 958.320 and, when applicable, OMB Circular A-133, during our audits. Single Audit rules are applicable when federal support exceeds $750,000 under the Uniform Guidance rules.
We provide tax services for exempt organizations, individuals, partnerships/LLCs, corporations (both "C" and "S"), and estates/trusts.
One of the more important byproducts of our audit services is the issuance of a Letter to Management communicating our recommendations for improving accounting processes and strengthening internal control procedures. This communication is intended to satisfy the requirements of Statement of Auditing Standards No. 114 (SAS 114) The Auditor's Communication with Those Charged with Governance and Statement on Auditing Standards No. 115 (SAS 115), which requires an auditor to communicate internal control related matters identified in an audit to those charged with governance (formerly SAS 112).
In accordance with the above, we issue our “Management Letter” with several objectives in mind:
- Identify material weaknesses and/or significant deficiencies
- Communicate reportable conditions involving weaknesses which are NOT material
- Provide input on operational matters
- Disclose other matters pertaining to internal controls
A review is the second highest level of service available from a CPA firm. It does NOT include independent verification of the company’s assets, liabilities, revenues and expenses. Review procedures include visual inspection of documents, recalculation of important financial ratios and percentages, analytical review, inquiry and observation, and a variety of other procedures designed to verify internally prepared financial data.
A review of financial statements will result in the preparation of full disclosure financial statements, with limited assurance on the fairness of their presentation. While not as in-depth as an audit, a review does provide many useful services.
We analyze your financial position and result of operations, including comparison to prior year and to industry averages. Variations are investigated and explained to management.
A review is generally the minimum level of assurance required by banks for debt agreements. Additionally, many bonding companies will accept reviewed financial statements for certain performance bonds. In some cases, a financial institution will permit the issuance of compiled financial statements, which are substantially less in scope than an audit or review.
Compilations are the most basic form of financial statements that carry an accountant’s opinion letter. A full set of financial statements will include balance sheet, statement of income, statement of cash flows and notes to the financial statements.
A compilation does not involve any audit or review of client accounting data. No independent verification of any financial data is performed. Instead, information provided by the client is utilized to prepare financial statements in the proper form with necessary footnote disclosures in accordance with Generally Accepted Accounting Principles (GAAP). In the process of completing a compilation, we may be required to post certain adjustments, such as depreciation and amortization, into the client accounting records.
Many banks and insurance companies will accept compiled financial statements for small and/or closely-held businesses. Larger companies, or those with significant loans, accounts receivable and/or inventory, may be required to issue financial statements with a higher degree of authenticity, such as a review or audit. Generally, a compilation may be sufficient to satisfy the minimum requirements of a bank loan agreement or an insurance company performance bond.
Preparation of compiled financial statements is usually an inexpensive proposition, unless significant effort is required to properly formulate financial data and obtain information for financial statement disclosures. Our fees are set at a low and fixed affordable fee, assuming sufficient support is received from our client in the data-gathering stage.
Business valuation plays a key role between sellers and purchasers of an ongoing viable business. It is often the realistic valuation that brings buyer and seller close enough to begin a successful negotiation process. Conversely, an unrealistic valuation can become a barrier to generating interest, and an otherwise strong business may become tomorrow’s “white elephant.” It is important that both buyer and seller have a good idea of how the market values the type and quality of business being looked at. Otherwise, it is unlikely that the parties will progress to that all-important “zone of mutual interest.”
Strictly speaking, a business is worth what a buyer will pay for it. Business valuation is the mix of art and science that attempts to pre-determine a reasonable range in value for the enterprise. While inexact by definition, there are a number of ways to estimate a fair price.
Possible Methods of Valuation:
- EBITDA Multiplier Approach
- Capitalized Earnings Approach
- Excess Earnings Method
- Discounted Cash Flow
- Rule of Thumb Methods
- Start-Up Cost Approach
- Acquisition Debt Value
- Liquidation Value Method
We also offer consulting services for special projects. As much as you might like, not everything fits neatly into your plans. We provide a full range of consulting services to address those "out of the box" needs.