Unlike an audit, a review is narrower in scope, still providing an evaluation of a business’s records, but limiting the analysis to analytical procedures and assessment of management.
As a result, a financial review provides limited assurance, while an audit provides a reasonable amount of assurance.
The outcome of a review can only determine the plausibility of a business’ financial statement, determining if financial statements are free from any material misstatements and if they meet generally accepted accounting principles.
It is commonly thought that a review can be an easy first step for transitioning into an audit in the following year, but this is not always the case. A review, instead, carries its own set of benefits.
Having financial statements reviewed puts another, unbiased set of eyes on a business’s financial statements. This can help provide extra security and confidence that is reassuring to a business, its board, lenders, and investors.
Many business owners who are not required to have an audit, but still would like the thorough analysis of their financial records, many instead choose to have a review. This will also let them save time and money.