A review is an analytical evaluation of a business’s financial statements or non-financial information where limited assurance is provided on whether the financial statements as a whole are free from material errors or fraud. Our report will be a conclusion expressed in a negative form.
Given the level of assurance is lower for a review than an audit, this form of assurance can be more cost effective for particularly smaller businesses or organisations. For Public Benefit Entity (PBE) this will depend on the tier level your organisation reports under and your operating expenditure.
An Audit is a level of reasonable assurance (higher form of assurance) where procedures involve detailed testing of accounting records and analytical review. Our report will be an opinion expressed in a positive form.
This may be a more cost effective option to consider for smaller clients who do not need a mandatory audit required by funders or Trust deeds/Constitution.
While providing less assurance than an audit, there is still value added by a review, as it ensures a second pair of eyes (from a qualified professional) has reviewed the financial report.
A review is especially helpful for smaller not-for-profit organisations where the assets being managed are modest, and where there is only a sole charge Treasurer. This is especially true if you are a Registered Charity, with the changes in the Charities Act requirements for financial reporting.
• Your founding document requires it, to ensure good governance practices are in place.
• The governing body requires only a modest level of independent assurance, therefore this is a cost-effective option.
• Legislation requires it due to the scale of your operations.
• If you don’t have a qualified accountant prepare your financial statements then this is an opportunity for an independent accountant to work with your Treasurer, who may benefit from the knowledge transfer.
A review report provides negative assurance report along the lines that “nothing has come to our attention” to suggest that financial statements are not valid and reliable. In this limited review we undertake mainly the following procedures:
• We discuss with management key aspects of how your organisation operates.
• We perform a high level analysis of the financial report.
• We evaluate compliance with applicable financial reporting standards.
APPLICABLE STANDARDS: ISRE (NZ) 2400: Review of Historical Financial Statements Performed by an Assurance Practitioner.
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