Congratulations! You’ve created a business successful enough that you are ready to seek additional financing. As part of that process, your bank is requiring that you provide them with annual reviewed financial statements, leaving many business owners wondering what that means and why it’s necessary.
Is This an Audit?
No— an audited financial statement is the highest level of opinion that an external CPA can provide. It involves detailed tests of account balances through a risk-based approach. Or in other words, where is this financial statement subject to areas of fraud or misstatement.
So, What Is a Review?
A review provides LIMITED assurance on the reliability of the financial statement numbers. It consists primarily of inquiries and analytical procedures, such as discussions with management about financial trends, key ratios, unusual items, and how the results compare to industry benchmarks. There is no testing of account balances, or the internal controls or processes used to record the information.
How Do I Find Someone to Provide a Reviewed Financial Statement?
- Ask Your Banking Relationship Manager
- They may recommend firms they already work with, which can make the process smoother.
- Conduct an Internet Search
- Be sure to look for qualified, reputable firms.
- Verify credentials: Confirm the firm uses licensed CPAs with review engagement experience.
- Use directories: AICPA “Find a CPA” or your state CPA society are good resources.
- Check industry experience: Choose a firm familiar with your type of business.
- Be sure to look for qualified, reputable firms.
- Interview a Few Firms
- Ask about their process, timeline, fees, and who you’ll be working with day to day.
What Are the Benefits of Having a Review Performed?
A review engagement provides several meaningful benefits for a business. It adds credibility to your financial statements by offering limited assurance from an independent CPA, which is often enough to satisfy banks, investors, and other stakeholders without the cost or effort of a full audit. A review also helps identify unusual trends or potential errors early through the CPA’s analytical procedures and inquiries, giving you an extra layer of insight into your financial reporting. In many cases, it strengthens internal processes and supports compliance with loan covenants or other external requirements. Overall, a review engagement offers a balanced mix of assurance, value, and professionalism that enhances confidence in your financial information.
If you have any questions or are considering a review engagement, we are here to help. We have deep experience across a variety of industries and are committed to providing clear, timely, and reliable financial insight. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
