Less extensive than an audit, but more involved than a compilation, a limited assurance review consists mostly of the analytical procedures that we apply to the financial statements, and the 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.
A review doesn't require us to study and evaluate your company's internal controls or verify data with third parties or to even 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.
With a compilation audit we do not require management to have an inquiry, nor do we complete any analytical procedures. With this audit, we rely on your businesses accounting practices and your understanding of your business.
The report we give your business will state that it is the "representation of management" and have no opinion expressed or assurances given.
Banks will often require a compilation from an independent CPA as part of their lending agreements.