Definition
The report on a review engagement under AR-C 90 expresses limited assurance through a conclusion. In the usual form, the accountant states that the accountant is not aware of any material modifications that should be made to the financial statements for them to be in accordance with the applicable framework. The report also says the review was conducted under SSARS, describes at a high level what a review involves, and states that the accountant's responsibility is to obtain limited assurance.
Why it matters in an audit or review
The accountant must be independent of the entity to issue a review report. The work is mainly inquiry and analytical procedures, with further procedures when the accountant becomes aware that the statements may be materially misstated. Reviews are common where a lender or surety wants some assurance but does not require an audit.
Example
Illustrative: a review of a retailer reveals a margin that jumped 6 points without explanation. The accountant extends inquiries, finds a costing error, and has management correct it before issuing the report.
Common mistakes
Adding opinion language or implying the statements were audited.
FAQ
Does a review report cover disclosures?
Yes. The conclusion covers the financial statements, including the notes. Missing or inadequate disclosures are a departure from the framework that the accountant addresses in the report.
Sources
- AICPA, AR-C Section 90, Review of Financial Statements
- AICPA, AR-C Section 60, General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services
- AICPA Code of Professional Conduct, Independence Rule, ET 1.200.001
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error