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Atul Deshmukh

atul.deshmukh@knavcpa.com

Navneet Sharma

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    REVIEWS AND COMPILATIONS

    Have your independent accountants informed you of the critical differences between reviews and compilations?

    Reviews

    A ‘review’ is somewhat more rigorous than a compilation but less detailed than an audit. A review report states that the CPA has reviewed the financial statements in accordance with Statements on Standards and Review Services (‘SSARS’). It also states that a review consists principally of inquiries of company personnel and analytical procedures; that a review is substantially less in scope than an audit; and that the CPA is not aware of any material modifications that should be made in order to be in conformity with GAAP.

     

    For a review:

    • The CPA must be independent
    • The report must include notes and cash flows

     

    Compilations

    A compilation report states that the CPA has compiled the financial statements in accordance with SSARS; that a compilation is limited to presenting, in the form of financial statements, information that is the representation of management; and that the CPA does not express an opinion or any other form of assurance on them.

     

    A compilation report:

    • Does not have to include footnotes or cash flows, but that limitation must be mentioned in the report
    • The CPA does not have to be independent, but that limitation must be mentioned in the report
    • The CPA’s responsibility is to see that the financials are free from obvious material misstatement