Level of Assurance:
A review is not as extensive as an audit
(but is more extensive than a compilation
) and therefore, provides less assurance and credibility to the financial statements.
A review consists primarily of enquiry, analytical procedures, and discussion, and can be useful for companies not legally required to file audited financial statements. This type of engagement is useful when a company doesn't need audited financial statements but management or third parties (eg. Banks, granting agencies, etc.) want some assurance that the financial statements are plausible.
A Chartered Professional Accountant, such as one from a DNTW firm, reviews financial statements in accordance with established professional standards. If it is determined that the financial statements deviate from Canadian generally accepted accounting principles (GAAP), this fact is disclosed in the review engagement report.
Plausibility is the guide for the Chartered Professional Accountant in preparing a review engagement report. The accounting firm accepts financial information from the client, and applies Canadian generally accepted standards for review engagements to determine the plausibility of the financial information. It must appear plausible based on the firm's knowledge of the client's operations and the industry, and based on the procedures performed.