Reviews

In a review of financial statements, the CPA seeks to obtain limited assurance as a basis for reporting whether the CPA is aware of any material modifications that should be made to the financial statements in order for them to be presented in accordance with an applicable financial reporting framework. A review is substantially less in scope than an audit, and often is performed for privately held companies that are required to provide financial statements to outside parties such as banks, creditors, or potential purchasers. Reviews of financial statements are conducted in accordance with the the AICPA Statements on Standards for Accounting and Review Services (SSARSs), except for reviews of certain interim financial information that are conducted in accordance with the AICPA Statements on Auditing Standards (SASs). Reviews of subject matter other than historical financial statements are performed in accordance with the AICPA Statements on Standards for Attestation Engagements (SSAEs).

Compilations

When a CPA undertakes this type of service, the CPA applies accounting and financial reporting expertise to assist his or her client in the presentation of financial information, but the CPA does not seek to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. Additionally, the CPA is required to determine if he or she is independent of the client, and the CPA will include this determination in a report issued in accordance with the AICPA Statements on Standards for Accounting and Review Services (SSARSs).

Preparation Services

In a preparation service, a CPA uses his or her knowledge of the client business to prepare financial statements in accordance with the AICPA Statements on Standards for Accounting and Review Services (SSARSs). Those standards do not require the CPA to determine if he or she is independent of the client, nor is the CPA required to issue a report on his or her services.