Reviews are usually performed to satisfy third parties that want to be assured that the financial statements are not materially misstated. They provide a lesser degree of assurance to financial statement users than an audit. Also, unlike an audit, there is no expression of an opinion on the financial statements, testing of controls or financial data. Reviews essentially consist of inquiries of company personnel and analytical procedures applied to financial data.
Compilations provide the lowest level of assurance of the financial statements services. They are often required by outside third parties as well internally by companies.
In a compilation we assist management in presenting their financial information as financial statements in the proper form. Compilations also require us to acquire an understanding of the client’s industry and to obtain specific knowledge about the client. Additionally, we read the financial statements and ensure they are free from obvious material errors. They provide no expression of an opinion on the financial statements.
Agreed Upon Procedures
Agreed upon procedures are performed when the parties involved concur that they want the accountant to perform a specific procedure or set of procedures. They can be useful when you or a third party wants some comfort about a specific area such as inventory or cash, but do not need the assurance and related time and expense of a full audit or review. Agreed upon procedures can deal with a diverse variety of subject matter such as the quality of collateral or due diligence related to a business acquisition. In all cases, agreed upon procedures are solely the responsibility of the parties who specify them and they never provide an opinion on the subject matter or financial statements.
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