01
The challenge
The client had grown from one facility into a group of partnerships with stakes from 5% to 85%. A third party evaluating her finances needed CPA-compiled statements for three full years, but the books were not in accounting software. Source records were bank, card and loan statements, prior returns and K-1s, some still outstanding.
02
Our approach
- Separate engagements for separate entities. The operating LLC is owned personally, so each entity received its own engagement letter, statements and compilation report.
- Rebuilt three years from source documents. Every statement was classified, reconciled to year-end balances and tied to the filed tax returns.
- Equity method from K-1 capital. Each partnership investment was carried at the holding company's share of K-1 capital, with the controlling 85% interest presented as an investment and explained in the notes.
- Rules for missing K-1s. Where a 2025 K-1 was not yet issued, the investment was carried at cost and disclosed.
- Clear disclosures. Basis of accounting, ownership percentages, a seller-financed note receivable, debt and related parties.
03
Results delivered
- Two complete sets of compiled statements for 2023–2025, each with a signed SSARS 21 compilation report.
- A holding company balance sheet showing each investment, ownership percentage and carrying value.
- A documented net worth position for the third-party review.
- Records organized for a move to year-round cloud bookkeeping.
04
Frequently asked questions
A CPA assists management in presenting financial statements and issues a compilation report without providing assurance. The statements may use the cash or income tax basis instead of GAAP.
Cash basis suits a single operating business with simple activity. Income tax basis suits a holding company whose investments and K-1 income already follow the tax return.
Yes. Investments are commonly carried using the equity method from each partnership's K-1 capital account, with ownership percentages disclosed.
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