Accounting & Review Service Engagements & Interim Reviews - CPA Auditing and Attestation (AUD)

A review engagement provides limited assurance. Limited assurance is given that the financial statements comply with the applicable reporting framework.

AR Section 90; review of financial statements. Section .04 states that the engagement determines: management responsibility, the auditor’s responsibility, and management objectives.

The CPA is required to obtain a representation letter from management for all financial statements and periods covered by the review report.

In order to issue a review report on the financial statements of a nonpublic entity, the accountant must be independent.

With a preparation requirement, the preparer must include a statement on each page of the financials. If he or she cannot, these two options are the only options.

Although the firm may assist management in the preparation of statements, the compilation audit report will state that the report is the responsibility of management.

A review engagement provides limited assurance. Limited assurance is given that the financial statements comply with the applicable reporting framework.

AR Section 90; review of financial statements. Section .04 states that the engagement determines: management responsibility, the auditor’s responsibility, and management objectives.

The CPA is required to obtain a representation letter from management for all financial statements and periods covered by the review report.

In order to issue a review report on the financial statements of a nonpublic entity, the accountant must be independent.

With a preparation requirement, the preparer must include a statement on each page of the financials. If he or she cannot, these two options are the only options.

Under AU 920 before agreeing on the scope of services the auditor must obtain certain assurances and perform certain procedures. These procedures include obtaining an understanding regarding specific matters, meeting with the requesting party, and providing clear communication stating no assurance will be provided.

AU 920 indicates that the auditor should make reference to the audit. Section .28 states that “The auditor should, in the comfort letter, make reference to, but not repeat, the report on the audited financial statements included in the securities offering. (Ref: par. .A28)”.

AU 920 requires that the auditors state their independence in the comfort letter. As directed in paragraph .35 “The auditor should state in the comfort letter that the auditor is independent, or the date through which the auditor was independent, with respect to the entity, and identify the applicable independence rules.”

Comfort letters are addressed to underwriters of securities ordinarily and most likely convey negative assurance on financial information.

A comfort letter is a letter from the independent auditor to the named underwriter just before the registration of the client's securities.

Positive assurance is provided with respect to a CPA's independence.

Under AU 920 before agreeing on the scope of services the auditor must obtain certain assurances and perform certain procedures. These procedures include obtaining an understanding regarding specific matters, meeting with the requesting party, and providing clear communication stating no assurance will be provided.

AU 920 indicates that the auditor should make reference to the audit. Section .28 states that “The auditor should, in the comfort letter, make reference to, but not repeat, the report on the audited financial statements included in the securities offering. (Ref: par. .A28)”.