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New Rules For Financial Statements of Small Businesses

New Rules For Financial Statements of Small BusinessesBesides the management of businesses, Financial Statements of businesses are used by their Vendors, Creditors and Investors etc.

They provide two broad levels of assurance, High and Low.

High level assurance is provided by Statements signed by Licensed Public Accountants (LPAs). Such statements cost more but are almost mandatory for large businesses.

A very limited, Low-level assurance is provided by those signed by Chartered Professional Accountants (CPAs). These are prepared under Compilation Engagements considered adequate for small businesses.

These statements used to include Notices to Readers (NTRs) for the last 35+ years. Now on, they must include Compilation Engagement Reports (CERs) instead of NTRs.

They provide more clarity about the nature and scope of Engagements but require more work from the accountants.
Small businesses aspiring to borrow funds to make their operations grow, shall be most likely asked to provide CER supported statements signed by CPAs or LPAs.

Vendors and Investors are also most likely to ask for such statements. CRA auditors are also likely to prefer seeing such statements.