What is the difference between compiled and reviewed financial statements?

Compilation (No Assurance Provided):

SSARS No.19 (AR Section 60.05) defines a compilation as follows,

  • A compilation is a service, the objective of which is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework. Although a compilation is not an assurance engagement, it is an attest engagement.

In summary, a compilation is the lowest form of financial statement assurance.

Review Engagement (Limited Assurance)

Concerning a Review engagement, SSARS No. 19 (AR Section 60.07) states,

  • A review is a service, the objective of which is to obtain limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework. In a review engagement, the accountant should accumulate review evidence to obtain a limited level of assurance. A review engagement is an assurance engagement as well as an attest engagement.

In summary, a review is the middle of the road in the financial statement world.  It provides more assurance than a compilation, but less than an audit.

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