REVIEW & NOTICE TO READER ENGAGEMENTS.
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Where The Role Of A Chartered Accountant Comes Into Play
Shareholders, investors, creditors/lenders, government agencies, regulators and even the general public use financial statements to make informed decisions, but how can they know if the financial information is dependable and truthful?
This is where the role of a Chartered Accountant comes into play, we perform various types of services that provide assurances and opinions on the accuracy, validity, and reliability of financial statements.
There are 3 types of engagements: audits, reviews, and compilations.
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An audit is at the top, it provides the most assurance that financial statements are not materially misstated due to fraud and/or error and it also includes an opinion from the auditor/accountant on the integrity of the financial information.
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A step below audits is what is known as a Review Engagement, typically this is requested by a bank, shareholders, potential investors, etc. A review provides a lower level of assurance than an audit but is faster and costs less; it essentially confirms or states that nothing has come to the attention of the auditor/accountant that would lead them to believe the financial statements are, in all material respects, with an applicable financial reporting framework. A review does not include an opinion.
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Lastly, there is the Notice to Reader (NTR) often times called a compilation engagement, this provides no assurance or opinion on the validity and reliability of the financial statements but is rather, the creation of the financial statements by a CPA, it is simply compiling of all financial information based on what the client has provided.
Audit
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To form an opinion on whether the financial statements were prepared, in all material respects, in accordance with an applicable financial reporting framework.
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Strongest indicator of the credibility of the financial statements.
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Where shareholders, investors or potential investors use the financial statements for their (continued) investment decisions.
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Reasonable
Review
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To form a conclusion on whether anything has come to the practitioner’s attention to cause the practitioner to believe the financial statements were not prepared, in all material respects, in accordance with an applicable financial reporting framework.
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Still provides a level of assurance but faster and costs less then an audit.
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Where a review engagement is acceptable, for obtaining financing, providing information to investors, or selling a business.
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Limited
Notice to Reader (NTR) or Compilation
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To compile financial information into financial statements based on information provided by the client.
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CPA assisted preparation and presentation of financial information.
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When management does not have expertise in financial reporting. Often combined with another service, such as taxes.
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None
If the CRA has contacted you for an audit or review engagement or you are looking to invest in a business, sell your own, or secure potential investors, the accountants at SMS can manage this endeavour so you can focus on running your business.
Contact Us
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