Review Engagements

Review engagements are performed by CPAs to provide limited assurance to those reading the financial statements. The AICPA provides AR-C 90 as guidance for this service.

Normally, the CPA creates the financial statements in conjunction with the review engagement. (The financial statements are a nonattest service. Reviews are an attest services.) In a review engagement, the accountant makes inquiries and uses analytics to detect material misstatements. Analytics are comparisons of numbers such as budget-to-actual or this year’s numbers compared with the prior year or this year’s ratios compared with the prior year. When the comparisons of numbers don’t align with the accountant’s expectations, he or she will dig deeper to see why.

A review report is issued in a review engagement. This report provides limited assurance which is less than the high assurance received in an audit. But the limited assurance is more than that of a compilation which is no assurance.

The cost of a review is less than that of audit since less work is required for this service.

The CPA has to be independent in order to provide a review engagement service to a client. Additionally, the financial statements must include notes the financial statements. There is no option to omit substantially all disclosures as there is in a compilation engagement.