As a leader in your organization, you know your financial statements are an integral part of your business operations, and you know that financial statement audits can be time-consuming and expensive. Consider review engagements if your partners and stakeholders need an overview of your financial statements but do not require the full details that an audit provides.
Let’s define a review engagement and why your organization might need one.
What is a Review Engagement?
A review engagement is a limited assurance service provided by an independent auditor. During a review, an independent contractor reviews or compiles your financial statements and evaluates the error level in your reports. A review engagement aims to ensure your documents align and are prepared with Generally Accepted Accounting Principles (GAAP) in mind.
It’s helpful to think of a review as a cursory glance at your financial statements to ensure you report the most accurate numbers based on the appropriate framework. A full audit, on the other hand, is a more in-depth investigation of your business. Unlike a full audit that provides the highest level of assurance, a review engagement provides limited assurance. This means the confidence level in ensuring your statements are free from misstatements is lower than what you would find in an audit engagement.
There are three main benefits to a review engagement over an audit. Those benefits include:
- Cost-effectiveness and efficiency
- Less disruption of your operations
- Quicker turnaround of an opinion
Types of Review Engagements
A review engagement doesn’t necessarily only apply to your financial statements. You can ask an independent contractor to review various parts of your operations to ensure your organization is on the right track and in alignment with GAAP.
Let’s look at the various review engagements an independent auditor can conduct for your organization:
- Financial statement reviews: limited assurance to ensure your financial statements do not represent misstatements
- Internal control reviews: limited assurance to review the effectiveness of your internal controls
- Compliance reviews: a limited assurance review to determine your organization’s compliance with federal and state regulations
- Operational reviews: a limited assurance review of your business operations
- Special purpose reviews: a limited assurance review of special interests, like previous errors in reporting or operations
When Does Your Organization Need A Review?
Certain types of organizations, like private companies, construction and contracting, nonprofits, and quarterly reporting requirements for companies reporting in compliance with the PCAOB, might not need a full audit but still need to provide a level of assurance and credibility to their stakeholders. That’s where review engagements come in.
Review engagements are also especially helpful when seeking outside funding that doesn’t require an audit or for reporting periods that don’t require an audit. While a review engagement doesn’t provide the same level of assurance as an audit, it still provides an acceptable level of assurance for many stakeholders.
Partner with Assurance Dimensions for Your Review Engagements
Whether you need help compiling your financial statements or want to determine whether your operations are on the right track according to GAAP, a review engagement might be the best choice.
Review engagements are cost and time-efficient. And, for even more efficiency, consider partnering with Assurance Dimensions. At Assurance Dimensions, we understand that your time is valuable. That’s why we offer virtual reviews over our secure cloud-based software. Plus, our experienced team is ready to help with your assurance needs. Contact us today to learn more about our compilation and review engagements.