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.
An Engagement Letter for Review of Financial Statements is a crucial document that establishes a professional relationship between an accounting firm and its client in Alaska. This legal agreement outlines the terms and conditions of the engagement, ensuring both parties understand their respective roles and responsibilities. The letter is of utmost importance as it sets the framework for conducting a review of the client's financial statements in accordance with the applicable accounting standards. The Alaska Engagement Letter for Review of Financial Statements typically covers various essential points to ensure a smooth and efficient review process. Firstly, it identifies the accounting firm and the client, detailing their contact information, addresses, and any other relevant details. It establishes the effective date and duration of the engagement, ensuring both parties are aware of the period for which the review will take place. The engagement letter also outlines the objectives of the review, which include providing limited assurance on the financial statements' reliability and conformity with Generally Accepted Accounting Principles (GAAP) or other applicable frameworks. It further establishes that the review will be conducted in accordance with the Statements on Standards for Accounting and Review Services (STARS) issued by the American Institute of Certified Public Accountants (AICPA). Moreover, the letter specifies the key acts to be performed by the accounting firm during the review process. This may include analyzing the client's financial statements, assessing the client's internal control systems, performing inquiry and analytical procedures, and obtaining relevant written representations from management. These procedures aim to provide a moderate level of assurance regarding the financial statements' accuracy and compliance. The engagement letter also highlights the expected communication between the accounting firm and the client. It specifies the format and timing of the review report that will be issued at the conclusion of the engagement, ensuring the client understands when and in what form they will receive the accountant's findings. Additionally, it establishes the client's responsibility for preparing accurate financial statements and providing all necessary information to the accounting firm in a timely manner. Some common types of Alaska Engagement Letters for Review of Financial Statements include: 1. General Engagement Letter: This is a comprehensive engagement letter covering all aspects of the review, suitable for most clients and situations. 2. Industry-specific Engagement Letter: This type of engagement letter is tailored for specific industries that require specialized knowledge or expertise, such as healthcare, manufacturing, or oil and gas. 3. Limited Scope Engagement Letter: This engagement letter limits the scope of the review to specific aspects of the financial statements or certain account balances, reducing the time and effort involved while addressing the client's specific needs. In conclusion, the Alaska Engagement Letter for Review of Financial Statements by an accounting firm is a vital document that establishes the terms and conditions for conducting a review engagement. It ensures both parties are aligned in their expectations, sets objectives, and outlines procedures to be followed. By using an appropriate engagement letter, an accounting firm can provide assurance to their clients regarding the integrity and reliability of their financial statements while complying with professional standards and regulations.An Engagement Letter for Review of Financial Statements is a crucial document that establishes a professional relationship between an accounting firm and its client in Alaska. This legal agreement outlines the terms and conditions of the engagement, ensuring both parties understand their respective roles and responsibilities. The letter is of utmost importance as it sets the framework for conducting a review of the client's financial statements in accordance with the applicable accounting standards. The Alaska Engagement Letter for Review of Financial Statements typically covers various essential points to ensure a smooth and efficient review process. Firstly, it identifies the accounting firm and the client, detailing their contact information, addresses, and any other relevant details. It establishes the effective date and duration of the engagement, ensuring both parties are aware of the period for which the review will take place. The engagement letter also outlines the objectives of the review, which include providing limited assurance on the financial statements' reliability and conformity with Generally Accepted Accounting Principles (GAAP) or other applicable frameworks. It further establishes that the review will be conducted in accordance with the Statements on Standards for Accounting and Review Services (STARS) issued by the American Institute of Certified Public Accountants (AICPA). Moreover, the letter specifies the key acts to be performed by the accounting firm during the review process. This may include analyzing the client's financial statements, assessing the client's internal control systems, performing inquiry and analytical procedures, and obtaining relevant written representations from management. These procedures aim to provide a moderate level of assurance regarding the financial statements' accuracy and compliance. The engagement letter also highlights the expected communication between the accounting firm and the client. It specifies the format and timing of the review report that will be issued at the conclusion of the engagement, ensuring the client understands when and in what form they will receive the accountant's findings. Additionally, it establishes the client's responsibility for preparing accurate financial statements and providing all necessary information to the accounting firm in a timely manner. Some common types of Alaska Engagement Letters for Review of Financial Statements include: 1. General Engagement Letter: This is a comprehensive engagement letter covering all aspects of the review, suitable for most clients and situations. 2. Industry-specific Engagement Letter: This type of engagement letter is tailored for specific industries that require specialized knowledge or expertise, such as healthcare, manufacturing, or oil and gas. 3. Limited Scope Engagement Letter: This engagement letter limits the scope of the review to specific aspects of the financial statements or certain account balances, reducing the time and effort involved while addressing the client's specific needs. In conclusion, the Alaska Engagement Letter for Review of Financial Statements by an accounting firm is a vital document that establishes the terms and conditions for conducting a review engagement. It ensures both parties are aligned in their expectations, sets objectives, and outlines procedures to be followed. By using an appropriate engagement letter, an accounting firm can provide assurance to their clients regarding the integrity and reliability of their financial statements while complying with professional standards and regulations.
