Compilations of financial statements present information that is the "representation of management" and provides an opinion or assurance on the statements. Compilations don't require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent CPA as part of their lending covenants.
Less extensive than an audit, a review engagement consists primarily of analytical procedures and various inquiries we make of your company's management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures.
Why might a business request a review engagement? It can be a good middle ground, providing the advantages of a CPA's technical expertise without the work and expense of an audit.
Which Type of Engagement Do You Need?
The type of engagement needed is dependent on the specific circumstances, including requirements imposed by clients or oversight entities.