Financial Statement Reviews
Reviewed financial statements provide the user with comfort that, based on the accountant’s review, the accountant is not aware of any material modifications that should be made to the financial statements for the statements to be in conformity with the applicable financial reporting framework. The CPA provides limited assurance on the Financial Statements and conducts his review by performing mainly analytical procedures and inquiry. Financial Statement Reviews provide significantly less assurance than a financial statement audit and are sometimes utilized between financial statement audits or when a financial statement user is willing to forgo the high level of assurance that an audit provides. The cost and amount of time needed to perform a Review are significantly less than what is required for a financial audit. Our Review Methodology is tailored from the requirements and guidelines of SSARS 19, the governing standard. As an attest engagement, we perform the same amount of independence verification we would perform on an Audit engagement. To be clear, we must maintain independence from the ownership or management of the organization for whose financial statements we are reviewing. In regards to the level of assurance, a financial statement review provides limited or negative assurance. The objective of a review is to obtain limited assurance that there are no material modifications that should be made to the financial statements in order for the financial statements to be in conformity with the applicable financial reporting framework. Management is responsible for the preparation of the financial statements and for designing and maintaining internal control. It is also management’s responsibility to prevent and detect fraud. We normally start our engagements with a visit to the facility or office of the client and perform an interview with the owners or others tasked with the entity’s management. As we are required to gain a solid understanding of the industry and the client’s operations, these interviews and “tours” provide a solid starting point and significantly contribute to our overall understanding of the entity and it’s environment. We conduct a significant amount of analytical procedures to identify variances or validate expectations. We document our procedures and interviews, which is then used to help us conclude on presentation of the financial statements.