COMPILATIONS AND REVIEWS:

Often times lenders and or state charitable organizations request a Compilation or a Review for organizations that require only a limited level of assurance.

Review and compilation services follow Statement on Standards of Accounting and Review Services (SSARS) issued by the Accounting and Review Services Committee (ARSC). Assurance services should only be performed by a Certified Public Accountants. 

These are different from audits in that they do not require us to test transactions or pull samples. Reviews and compilations are not only less rigorous and more cost-effective than audits; they may also be a preferred alternative. 

Compilations:

Compilation of financial statements is a service where the role of the CPA is more apparent to outside parties, and as such, the requirements for performing this service are more explicit. For example, if the CPA is not independent from ownership, management and other circumstances in their relationship to you and your business, she is required to disclose the impairment to her independence in her compilation report. The compilation report is the first page before the actual financial statements and is written by the CPA on her firm’s letterhead. The CPA is also required to read the financial statements in light of the financial reporting framework being used and consider whether the financial statements appear appropriate in form and are free from obvious material misstatements.

A Compilation will:

• Provide No Assurance
• Present Financial data from the organization n the form of Financial Statements
• Provide a Cover Letter from the CPA stating the compilation was performed, therefore demonstrating business association with a CPA without requiring a level of assurance on the accuracy of financial statements. 

Reviews:

The review service is one in which the CPA performs analytical procedures, inquiries and other procedures to obtain “limited assurance” on the financial statements and is intended to provide a user with a level of comfort on their accuracy. A review is substantially narrower in scope than an audit. In a review engagement, the CPA will issue a formal report that includes a conclusion as to whether, based on the review, he is aware of any material modifications that should be made to the financial statements in order for them to be in accordance with the applicable financial reporting framework.

A Review will:

• Rely primarily on inquiry related to the accounting practices and principles used by the business.
• Perform analytical procedures to understand account balances
• Provide limited assurance on financial statements without issuing an opinion
• Presentation data in Financial Statement format 

Audits:

An audit of financial statements provides the highest level of assurance that includes evaluation of internal control, an assessment of fraud risk, and other procedures with the goal of obtaining reasonable assurance about whether the financial statements are free from material misstatement.

If asked for an audit, ask if a review will meet the requirements. If you need an audit, we may be able to refer you to one of our partners.