Although gathering and dealing with financial reports and statements can be stressful, preparing for review engagements doesn’t need to be overwhelming. Preparations are much easier when you understand the specifics of review engagement procedures.
Let’s take a moment to define a review engagement so you can better understand what to expect during the process.
What is a Review Engagement?
A review engagement is a limited assurance service that independent auditors or practitioners provide. During a review engagement, your auditor compiles and reviews your financial statements and reports and provides limited assurance on the subject matter of your reports.
As they review your company’s financial statements, they’ll also evaluate the error level in your documents according to Generally Accepted Accounting Principles (GAAP).
However, it’s important to note that a review engagement is not an audit—and cannot replace an audit requirement.
Unlike an audit, review engagements are cursory glances at your existing framework to ensure your reports are accurate and align with regulatory standards. Review engagements benefit you and your team by allowing you to fix any inconsistencies before it’s time for an audit. They’re also helpful for stakeholders and financial institutions looking to invest in your business.
Key Review Engagement Procedures
Review engagement procedures are slightly different since reviews are not the same as audits. However, you’ll need to partner with an independent auditor to complete your review, and you’ll still need to provide your practitioner with access to your financial statements. Here is what you can expect during the review process.
1. Initial Inquiry
Your audit firm will first chat with your internal accountants about their accounting standards and practices to prepare your company’s financial statements and documents. Understanding these procedures will help your auditor determine critical issues in your reporting framework.
2. Determine the Accuracy of Your Financial Statements
Once your audit specialist understands how your financial statements are prepared, they’ll turn their focus to determining the accuracy of your financial statements. This means they’ll spend some time chatting with your business leaders and glancing over your numbers to ensure everything looks correct according to GAAP and your framework.
3. Complete Analytical Procedures
As part of your review engagement, your audit team will review the financial statements primarily through analytics and inquiries. These are designed to identify any unusual or unexpected items that may need further investigation by management. The goal of the review is to ensure that the financial statements present an accurate description of the company’s financial position without the extensive testing of an audit.
Begin Review Engagement Procedures with Assurance Dimensions
Although it may seem time-intensive, review engagement procedures are very efficient (and often cost-effective) compared to complete audits of your organization. Once you provide your audit team with the necessary information, a review should take very little time to complete.
At Assurance Dimensions, we pride ourselves on ensuring efficient audited and reviewed financial statements. Our secure cloud-based services allow us to work with you on your schedule in real-time. Our dedicated team of accounting professionals is experienced and ready to help with your assurance needs. Contact us today to learn more about our compilation and review engagements.