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Reviewed
Financial Statements
Reviews provide limited assurance to third-party users of the financial statements but require substantially less time and resources than audits. In a review engagement, we will:
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Perform various analytical procedures on your financial records
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Make inquiries of you and your staff members
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Provide a reviewer's report that is attached to the financials.
Unlike an audit, a review does not result in an opinion on your financial statements. Instead, we provide a “conclusion” that we are not aware of any modifications that would be required to be made to your financial statements.
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Our review conclusion states that, based on our knowledge, there are no necessary modifications that should be made to the financial statements for them to conform with the applicable financial reporting framework. This is referred to as “negative assurance”, in contrast to the “positive assurance” provided by an audit.
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Other than the differences in wording of the CPA letter, the financial statements prepared during a review are identical in format to those prepared during an audit.
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One of the advantages of a review over an audit is the cost factor. Reviews are generally less expensive than audits, making them a more feasible option for some organizations, especially smaller ones or those with limited budgets.
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However, it's important to note that a review provides a lower degree of assurance compared to an audit. This means that while a review involves some analytical procedures and inquiries, it does not include the in-depth examination of financial records and internal controls that an audit does.
This process is particularly suited for organizations that require a formal assessment of their financial statements but do not need the higher level of assurance that an audit provides. By opting for a review, organizations can still demonstrate financial credibility and reliability to stakeholders without incurring the greater expenses and time commitments of an audit.
Often, grant writers, banks, or other financial statement users will allow smaller organizations to obtain a review initially, then progress to an audit later on as the organization grows or financing needs increase.
If you are considering obtaining CPA-prepared financial statements for the first time, we understand the different service levels can be confusing. We would be happy to discuss your options and help review any specific requirements you have to ensure the service level selected meets your needs.