Review of Financial Statements

Obtain limited assurance that there are no material modifications to the FS

Requirements:

• Understanding the Client
• Inquiries of internal personnel (no external people/entities)
• Analytical procedures
• MRL (required!)

DO NOT:

• Obtain understanding of internal control 
• Test internal control 
• Assess control risk
• Perform audit tests
• Assess fraud risk
• Communicate with predecessor accountant (not required, but may)

Other notes:

• If FS has GAAP departure, disclose in separate paragraph in the Independent Accountant's Review Report
• All FS must refer to "see Independent Accountant's Review Report"

Compilation of Financial Statements

To assist management in presenting financial information in the form of financial statements

No assurance provided

Requirements:

• Knowledge of industry accounting principles and practices
• Understanding of Client's business
• Reading of financial statements for obvious material errors 
• fraud, illegal acts, going concern, subsequent events

Compiled statements that omit GAAP disclosures - include in report that:

• FS are prepared in conformity with comprehensive basis of accounting other than GAAP
• FS are otherwise in conformity with GAAP
• Reason for omission was not to deceive user
• Warns user of missing disclosures

Other notes:

• Accountant DOES NOT need to obtain an understanding of internal control (review and comp)
• MRL is NOT required
• If Client fails to provide a rep letter for a review of a balance sheet, accountant may issue a compilation report with Client's consent