Reviews and Audits
Let H&H Accounting Services Provide the Reviews or Audits Your Phoenix Business Needs
Review
A review is a limited level of assurance service that involves the CPA conducting inquiries and analytical procedures to obtain a reasonable level of assurance that the financial statements contained in the review are free of material misstatements.
The CPA provides a written report indicating that the financial statements are fairly presented in accordance with a specific accounting framework but does not provide an opinion on the accuracy of the financial statements.
This level of assurance is greater than what a CPA provides in a compilation cover letter but less than the assurance provided with an audit. Each higher tier of assurance requires more legwork and research on the part of the CPA, which is why reviews can cost significantly more than a compilation but less than an audit.
Audit
An audit is a higher level of assurance service than a review. It involves the CPA conducting an in-depth examination of the financial statements and the underlying accounting records and operations of a business to form an opinion on the accuracy and reliability of the financial statements. They are required to do due diligence to ensure the information they’re using to generate financial statements are indeed factually accurate.
The CPA provides an auditor's report, indicating whether the financial statements are presented fairly, in all material respects, in accordance with a specific accounting framework. This statement means the CPA is putting their own reputation on the line, so they have significant incentive to ensure the financial statements in the audit truly do reflect reality.
When Should a Business Get a Review or Audit Instead of a Compilation?
A compilation is appropriate when a business wants to have its financial statements organized and presented in a uniform format but does not need a review or an audit. A compilation is the least expensive of the three options and is typically used by small businesses that do not need to provide their financial statements to external stakeholders.
A review is appropriate when a business needs to provide at least a limited level of assurance on the accuracy of its financial statements but does not require an auditor's opinion. A review is less comprehensive and less expensive than an audit and can be useful for small businesses that want to demonstrate to stakeholders or lenders that their financial statements have been examined by a professional.
An audit is appropriate when a business needs to have a higher level of assurance on the accuracy of its financial statements and wants to provide an auditor's opinion. An audit is a more comprehensive and expensive assurance service and is typically required by for larger loans, government agencies, investors or other stakeholders.
The specific needs of a business and the requirements of its stakeholders will ultimately determine whether a compilation, review or audit is appropriate. It's always a good idea to consult with a CPA to determine the best course of action.
The team at H&H Accounting Services would be happy to help with your review or audit. Don’t hesitate to give us a call at (480) 561-5805 to learn more about your options.