Reviewed Financial Statement Services
Less extensive than an audit, but more involved than a compilation, a review engagement consists primarily of analytical procedures we apply to the financial statements, and various inquiries we make of your company’s management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.
Reviewed financial statement services rely upon inquiry and analysis of the financial statements instead of detailed testing procedures. Essentially a review is designed to determine if your financial statements make sense, without applying audit tests. Thus, a review offers limited assurance instead of issuing an opinion.
A review doesn’t require our CPA firm to study and evaluate your company’s internal controls or verify data with third parties or physically inspect assets. Rather, a review report expresses limited assurance in the form of the statement: “We are not aware of any material modifications” for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures.
A financial statement review provides limited assurance that there are no material modifications that need to be made to an entity’s financial statements for them to be in conformity with U.S generally accepted accounting principles or another comprehensive basis of accounting. A review does not require Schultz, Wood & Rapp, P.C. to obtain an understanding of internal control, or to assess fraud risk, or other types of audit procedures.
Consequently, a review does not provide the assurance that our CPA firm has become aware of all the significant matters that would normally have been discovered and disclosed in an audit.
Why might a business request a review engagement? It can be a good middle ground, providing the advantages of our CPAs’ technical expertise without the work and expense of an audit. Reviews are more expensive than a compilation and less expensive than an audit. Reviews are preferred by businesses whose lenders and creditors will allow them to use this approach, thereby saving the cost of a full audit.