Review
Financial statement reviews under SSARS that give lenders and stakeholders limited assurance at a lower cost than a full audit.
Overview
A review engagement is a middle level of assurance between a compilation and an audit. Under the Statements on Standards for Accounting and Review Services (SSARS), the CPA performs inquiry and analytical procedures to obtain limited assurance that no material modifications are needed for the financial statements to conform to the applicable framework. A review does not include testing internal controls, confirming balances with third parties, or the other evidence-gathering procedures required in an audit, which is why it generally costs less and takes less time.
Many lenders, sureties, and landlords accept reviewed financial statements for borrowers below a certain size or risk level, and some move clients from audits to reviews, or from reviews to audits, as circumstances change. Pease Bell performs reviews for private companies and not-for-profit organizations and can help you confirm which level of service your lender or agreement actually requires before you commit.
Our Review Services
SSARS Review Engagements
We perform reviews under AICPA SSARS, applying inquiry and analytical procedures and issuing a review report that expresses limited assurance on your financial statements as a whole.
Lender-Required Reviews
We perform reviews that meet the reporting requirements in loan agreements and can coordinate timing with covenant reporting dates so statements reach your lender when due.
Service Level Guidance
We help you determine whether a compilation, review, or audit is required by your lender, surety, or agreement, so you do not buy more or less assurance than you need.
Audit-to-Review Transitions
We help companies whose stakeholders allow a step down from audit to review understand what changes, and help companies preparing to move from review to audit get ready.
Financial Statement Preparation
We can help prepare financial statements and disclosures in accordance with U.S. GAAP or another acceptable framework, consistent with the independence requirements that apply to the review.
Observations for Management
We share accounting and reporting observations that come up during the review, such as recurring adjustments or disclosure issues, to help improve the next year’s statements.
Challenges We Help You Address
- ✓A lender requiring reviewed statements as a condition of financing
- ✓Paying for an audit when a review would satisfy stakeholders
- ✓Unclear differences between compilation, review, and audit reports
- ✓Growth or new financing that may soon require a full audit
- ✓Year-end statements that need significant adjustments before issuance
Frequently Asked Questions
What is a review engagement?
A review engagement is a service in which a CPA performs inquiry and analytical procedures on an entity’s financial statements to obtain limited assurance that no material modifications are needed for them to conform to the applicable financial reporting framework. Reviews are performed under the AICPA’s SSARS. The CPA must be independent, and the resulting report states the limited assurance provided.
What is the difference between a review and an audit?
An audit provides reasonable assurance and includes procedures such as testing transactions, confirming balances with third parties, observing inventory, and obtaining an understanding of internal control. A review provides limited assurance and relies mainly on inquiry and analytical procedures. Because a review involves less testing, it is generally less expensive and quicker, but it gives users less assurance than an audit.
What is the difference between a review and a compilation?
In a compilation, the CPA assists in presenting financial information in the form of financial statements but provides no assurance, and the CPA is not required to be independent. In a review, the CPA performs inquiry and analytical procedures and provides limited assurance, and independence is required. A review gives users more confidence than a compilation, at a higher cost.
Will my bank accept reviewed financial statements?
Often, yes. Many lenders accept reviewed financial statements, particularly for smaller borrowers or loans with lower risk, while larger credit facilities more commonly require audits. The requirement is usually spelled out in the loan agreement or commitment letter. If it is unclear, ask your lender before year-end, since the answer determines which engagement you need to schedule.
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