Understanding review services for financial statements

What is a Review?

A review engagement consists mainly of analytical procedures applied to the financial statements and various inquiries made to company management. It provides limited assurance, essentially concluding that the CPA firm is not aware of any material modifications that should be made to the financial statements for them to conform with the applicable financial reporting framework.

Key Benefits

Financial statement reviews are less costly and time-consuming than audits, which makes them accessible for smaller businesses that may not require a full audit. They still enhance the credibility of financial statements, improving stakeholder confidence.

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The Review Process

A review doesn't require the auditor to obtain an understanding of internal control or assess fraud risk, nor does it involve testing accounting records through inspection, observation, or confirmation. Instead, it's predominantly based on performing analytical procedures and inquiring of management.

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Conclusion

If your business isn't required to perform a full audit but you wish to instill a degree of confidence in your financial statements, a financial statement review is a cost-effective alternative.