Partner in Charge – Audit Department
When your business is growing, it is normal to need financing from a bank. Prior to providing lending to your business, your banker may want added confidence in your internal financial statements by an independent CPA. While the highest level of assurance is an audit, you may not always need or want to pay for an audit. That’s where a review engagement can be a great fit.
A review engagement is a service provided by an independent CPA where we take a high-level look at your financial statements and perform certain procedures to determine whether anything seems incorrect, with the end result of providing limited assurance on your financial statements.
Think of it like this:
- An audit is a deep dive into your numbers, accounting policies, processes and internal controls and includes testing of source documents.
- A compilation simply organizes your numbers for proper presentation.
- A review falls right in between and adds credibility without the time and cost of an audit.
With a review engagement, your CPA will:
- Analyze financial trends and relationships
- Make inquiries to understand your business and accounting policies
- Ask questions about unusual changes or balances
- Follow up on anything that doesn’t seem consistent or appropriate
In simple terms, a review engagement is a way for a CPA to take a step back and look over your financial statements to see if anything stands out as unusual or inconsistent with your accounting policies. It’s not as in-depth as an audit, but it goes beyond just putting numbers together.
At the end of the engagement, you get financial statements accompanied by an independent accountant’s report stating that they are not aware of any material modifications needed for the financial statements to be in accordance with the chosen framework.
If you will be talking to a bank about a loan or line of credit, there’s a good chance they’ll ask for audited or reviewed financials. Your CPA may be able to assist in the decision on whether a review engagement will meet the needs of the bank so that you do not incur additional costs for an audit. Connecting with a qualified CPA before you actually need the review or audit is important so that you avoid delays in obtaining the funding necessary to make important business purchases. Connect with a WFY advisor here.
Wright Ford Young & Co. is headquartered in Irvine, CA and is one of the largest local CPA firms in Orange County. WFY is a full service corporate accounting firm offering audit, tax, estate and trust, and business consulting services to closely held company and family business owners. More information about our Firm can be found at www.cpa-wfy.com.