Reviews and Compilations
Stockholders, creditors, and private investors often need assurance that a company’s financial statements accurately represent its true financial position. Since different stakeholders have varying levels of risk tolerance, we offer three levels of assurance to meet your needs.
Review – Limited Assurance
A review engagement provides limited assurance, making it less extensive than an audit but more involved than a compilation. It primarily involves:
- Analytical procedures applied to financial statements
- Inquiries made to management
If any inconsistencies or questionable information arise, additional procedures may be necessary.
A review does not require an evaluation of internal controls, verification of data with third parties, or a physical inspection of assets. Instead, it expresses limited assurance with the statement:
“We are not aware of any material modifications” for the financial statements to be in conformity with Generally Accepted Accounting Principles (GAAP).
Reviewed financial statements must include all required footnotes and disclosures.
Why Choose a Review Engagement?
- It provides CPA expertise without the cost and effort of an audit.
Compilation - Lowest Level of Assurance
A compilation engagement presents financial information as the representation of management without expressing an opinion or assurance.
Key characteristics of a compilation:
- No inquiries of management or analytical procedures
- No verification of data
- Relies solely on accounting principles and a general understanding of your business
Why Choose a Compilation?
- Banks often require compilations from an independent CPA as part of lending covenants.
Which Report Should You Use?
Each type of financial statement report serves different needs, depending on:
- Bank requirements
- Other external stakeholder demands
- Budgetary constraints
Understanding each report’s unique strengths and limitations can help you choose the most appropriate one.
Need help deciding? Contact us, and we’ll guide you in selecting the right report for your business.