What Is the Difference Between a CPA Review & a CPA Compilation?
CPAs provide different levels of service for the preparation of financial statements. The greatest level of assurance that the financial statements do not contain material misstatements is provided by audited financial statements. Compiled financial statements provide the least amount of assurance. The level of assurance provided by reviewed financial statements falls between audited and compiled financial statements.
Other People Are Reading
-
Testing Procedures
-
CPAs perform limited testing procedures regarding the accuracy of information provided by management for reviewed financial statements. Compiled financial statements do not require any testing procedures to be performed.
Financial Statements Provided
-
A CPA will provide a balance sheet, income statement and statement of cash flows when preparing reviewed financial statements. Compiled financial statements only need to include a balance sheet and income statement.
-
Independent Inquiries
-
A CPA is required to make inquiries and corroborate information contained in a reviewed financial statement with third parties. For compiled financial statements, inquiries are not made.
Disclosure
-
Reviewed financial statements include notes which disclose details regarding long-term debt, fixed assets and related party transactions. The CPA has evaluated the disclosure notes for accuracy and compliance with Generally Accepted Accounting Principles (GAAP) when preparing reviewed financial statements. The CPA simply makes sure disclosure notes are included with compiled financial statements. He does not evaluate the notes for accuracy and compliance.
Cost
-
Reviewed financial statements will cost more than compiled financial statements due to the amount of work required by the CPA. Costs vary from region to region.
-
