Compilation and Review
A compilation and review engagement consists of analytical procedures we apply to the financial statements, and various inquiries we make of your company's management team. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures. A review does not require us to study and evaluate your company's internal controls or verify data with third parties or physically inspect assets. A review report expresses limited assurance in the form of the statement: "We are not aware of any material modifications" for the financial statements to be in conformity with the Generally Accepted Accounting Principles (GAAP). Reviewed financial statements must include all required footnotes and other disclosures. For many private businesses, the lender(s) or investors require only ?Review level financial statements?. The compilation of the statements may also be done by the client.Compilation
In compiling financial statements for a client, we present information that is the "representation of management" and express no opinion or assurance on the statements. Compilations do not require inquiries of management or analytical procedures. Instead, we rely on our knowledge of accounting principles and a general understanding of your business.
Banks often require compilations from an independent CPA as part of their lending covenants.