What is a Review Engagement?
A Review Engagement is a type of Engagement that provides users of the financial statements with limited or a low level of assurance.
This means that the professional accountant is only providing assurance that nothing has come to their attention that would indicate the financial information is not presented in accordance with Accounting Standards for Private Enterprises (ASPE).
What is the objective of a Review Engagement?
The objective of a Review Engagement is to review the financial statements to ascertain whether they are plausible, that is, worthy of belief by performing inquiries, discussion and analysis procedures.
In other words, the objective of a Review Engagement is to provide an opinion as to whether the financial statements as a whole are free from material errors or fraud.
When is a Review Engagement
Typically, the bank will require a Review Engagement to be performed on the year-end to get the assurance they need to approve future funding to companies or to ensure that the company is still capable of repaying bank debt obligations.
The review engagement is conducted with the goal of enhancing the user’s confidence in the financial statements.
What are the benefits
of a Review Engagement?
While in a Notice to Reader, there is no assurance provided, a Review Engagement provides a low level of assurance from the CPA which gives a client the comfort of the affirmation provided by an independent professional accountant.
What is the difference between an Audit and a Review Engagement?
The main difference is the level of assurance provided, which determines how much work will be done. A Review Engagement provides a low level of assurance, whereas an Audit provides the highest level of assurance.
An Audit builds upon the procedures performed in a Review Engagement and will require more hours to perform than the Engagement. This is because an Audit requires investigating the audit trail, obtaining third-party confirmations, and obtaining evidence on a sample basis.
Generally, public companies and not-for-profit organizations require an Audit.
Who can prepare Review Engagement financial statements?
Review Engagements are performed by licensed professionals, who are recognized as Chartered Professional Accountants (CPA) or Chartered Accountants (CA).