A lender asks for an accountant's report: confirm the exact service

Ask the lender to state the required service in writing before you request accounting proposals. Include the borrower entities, reporting period, accounting framework, deadline and intended users. Terms such as accountant prepared or certified accounts can conceal different expectations. Give the exact wording to prospective firms and ask them to resolve ambiguity with the lender before quoting.

Identify whether the request comes from an existing agreement, a preliminary underwriting discussion or a final approval condition. A loan officer's informal preference may differ from the signed document. Have the appropriate adviser resolve conflicting requirements. The company should purchase a defined report, with the lender's acceptance expectations understood, before funding an unnecessary or insufficient assignment.

AICPA explains that a compilation provides no assurance, a review provides limited assurance and an audit provides high but not absolute assurance. These are different professional assignments. Ask the firm to name the proposed service and report, rather than treating a more detailed bookkeeping package as interchangeable with a review or audit.

The lender decides what satisfies its requirement, subject to the relevant agreement. A CPA can explain available services and their limitations. Ask both parties to confirm the match. If the lender wants more assurance than your current accountant supplies, determine whether a separate firm is needed and have the professionals address independence and applicable qualifications.

A report engagement may assume the underlying records are ready. Ask the firm to list the schedules, explanations and management decisions required before it begins. Identify which your regular accountant will prepare and which the reporting firm offers under a separate scope. Reserve internal time for questions and approval.

Compare proposals using the same readiness assumptions. One firm may include substantial accounting assistance while another quotes only the report engagement. Request separate fees and dependencies so management can choose the arrangement and avoid paying two teams for the same reconstruction.

Address the effect of missing evidence or material unresolved balances. Ask when the firm will warn that the intended report or timing may change. A fee commitment cannot guarantee a particular professional conclusion. The engagement should explain the process for discussing limitations while the lender still has time to consider alternatives.

Agree who receives drafts, who approves management representations and who releases the final report. Confirm whether the provider sends it directly to the lender or gives it to the company for distribution. Identify any limits on further use, such as sharing it with another financing source later.

Include support for reasonable lender questions after delivery, with a clear boundary on extra procedures or a changed reporting period. A new lender request can become another assignment. Ask how the firm will price that work and obtain approval before undertaking it.

Retain the lender's written requirement, the accountant's agreed scope and the final report together. Ask the lender to acknowledge receipt and identify any outstanding condition. Do not remove qualifications, combine partial reports or describe the work as a higher level of assurance when forwarding it.

If the lender declines the deliverable, establish whether the problem is a misunderstood requirement, incomplete package or the report's findings. Each needs a different response. Resolve the specific gap with the lender and accountant before commissioning another report under the same ambiguous description.