A limited review of financial statements is an audit restricted to an examination either for a limited period or of a limited part of the records. A review does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; tests of accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents (for example, cancelled checks or bank images); and other procedures ordinarily performed in an audit. Accordingly, a review does not provide assurance that we will become aware of all significant matters that would be disclosed in an audit. Therefore, a review provides only 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 generally accepted accounting principles.
The definition of nonattest services is very inclusive. It includes, for example, preparation of the client's depreciation schedule and preparation of journal entries even if management has approved the journal entries. I have confirmed these examples directly with the AICPA ethics division. The definition of nonattest services includes preparation of tax returns.
Houston Texas Engagement Letter for Review of Financial Statements by Accounting Firm Introduction: An engagement letter is a crucial document that establishes the framework of a professional relationship between an accounting firm and its client. In the case of financial statement review engagements in Houston, Texas, engaging an accounting firm helps ensure accurate and reliable financial statements that comply with relevant regulations and standards. Key Elements of an Engagement Letter: 1. Objective: The engagement letter clearly defines the purpose of the engagement, which is to conduct a review of the financial statements. It emphasizes the need for the accounting firm to provide an opinion on whether the statements are plausible and in accordance with generally accepted accounting principles (GAAP) or other applicable criteria. 2. Scope of Work: This section outlines the specific procedures the accounting firm will perform during the review process. It includes a description of the tests, evaluations, inquiries, and analytical procedures that will be conducted to collect sufficient evidence for forming an opinion. The scope may vary depending on the complexity and size of the organization. 3. Responsibility of Management: The engagement letter establishes the client's responsibilities in providing accurate and complete financial records, access to necessary documents, relevant information, and representation letters when required. It emphasizes the importance of cooperation between the client and the accounting firm throughout the engagement. 4. Independence and Professional Skepticism: To ensure objectivity and independence, the engagement letter clearly states that the accounting firm will maintain professional skepticism and will not assume any responsibility for internal control or fraud prevention within the client's organization. It also highlights that the review engagement is not designed to detect fraud. 5. Deliverable and Timeline: This section specifies the expected delivery date of the reviewed financial statements as well as any interim reports required. It also defines how the final communication will be shared and highlights the client's obligation to promptly provide any necessary information or changes required for completion. Types of Houston Texas Engagement Letters for Review of Financial Statements: 1. Standard Engagement Letter: This is the most common type of engagement letter used for review engagements in Houston, Texas. It covers the basic elements discussed above and is suitable for many organizations with straightforward financial statement review needs. 2. Complex Engagement Letter: For organizations with complex structures, multiple subsidiaries, or unique industry-specific reporting requirements, a complex engagement letter may be necessary. It outlines additional procedures, specialized knowledge, and engagements tailored to the unique circumstances. 3. Limited Scope Engagement Letter: When specific areas of financial statements require review, such as specific accounts, business segments, or procedures, a limited scope engagement letter is used. It clearly defines the boundaries of the review and ensures efficient utilization of resources. Conclusion: In Houston, Texas, an engagement letter for the review of financial statements by an accounting firm plays a vital role in establishing a clear understanding between the firm and its client. By addressing objectives, responsibilities, scope, and other essential elements, the engagement letter helps ensure an accurate and comprehensive review process, leading to reliable financial statements compliant with applicable standards.Houston Texas Engagement Letter for Review of Financial Statements by Accounting Firm Introduction: An engagement letter is a crucial document that establishes the framework of a professional relationship between an accounting firm and its client. In the case of financial statement review engagements in Houston, Texas, engaging an accounting firm helps ensure accurate and reliable financial statements that comply with relevant regulations and standards. Key Elements of an Engagement Letter: 1. Objective: The engagement letter clearly defines the purpose of the engagement, which is to conduct a review of the financial statements. It emphasizes the need for the accounting firm to provide an opinion on whether the statements are plausible and in accordance with generally accepted accounting principles (GAAP) or other applicable criteria. 2. Scope of Work: This section outlines the specific procedures the accounting firm will perform during the review process. It includes a description of the tests, evaluations, inquiries, and analytical procedures that will be conducted to collect sufficient evidence for forming an opinion. The scope may vary depending on the complexity and size of the organization. 3. Responsibility of Management: The engagement letter establishes the client's responsibilities in providing accurate and complete financial records, access to necessary documents, relevant information, and representation letters when required. It emphasizes the importance of cooperation between the client and the accounting firm throughout the engagement. 4. Independence and Professional Skepticism: To ensure objectivity and independence, the engagement letter clearly states that the accounting firm will maintain professional skepticism and will not assume any responsibility for internal control or fraud prevention within the client's organization. It also highlights that the review engagement is not designed to detect fraud. 5. Deliverable and Timeline: This section specifies the expected delivery date of the reviewed financial statements as well as any interim reports required. It also defines how the final communication will be shared and highlights the client's obligation to promptly provide any necessary information or changes required for completion. Types of Houston Texas Engagement Letters for Review of Financial Statements: 1. Standard Engagement Letter: This is the most common type of engagement letter used for review engagements in Houston, Texas. It covers the basic elements discussed above and is suitable for many organizations with straightforward financial statement review needs. 2. Complex Engagement Letter: For organizations with complex structures, multiple subsidiaries, or unique industry-specific reporting requirements, a complex engagement letter may be necessary. It outlines additional procedures, specialized knowledge, and engagements tailored to the unique circumstances. 3. Limited Scope Engagement Letter: When specific areas of financial statements require review, such as specific accounts, business segments, or procedures, a limited scope engagement letter is used. It clearly defines the boundaries of the review and ensures efficient utilization of resources. Conclusion: In Houston, Texas, an engagement letter for the review of financial statements by an accounting firm plays a vital role in establishing a clear understanding between the firm and its client. By addressing objectives, responsibilities, scope, and other essential elements, the engagement letter helps ensure an accurate and comprehensive review process, leading to reliable financial statements compliant with applicable standards.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
