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.
Montana Engagement Letter for Review of Financial Statements by Accounting Firm is a comprehensive document that outlines the terms and conditions of the agreement between an accounting firm and its client for conducting a review of their financial statements. This engagement letter serves as a legally binding contract that clearly defines the scope of services, responsibilities, and expectations of both parties involved in the engagement. In Montana, there are typically two main types of Engagement Letters for Review of Financial Statements by Accounting Firm: 1. Full Review Engagement Letter: This type of engagement letter specifies that the accounting firm will perform a thorough review of the client's financial statements in accordance with the standards established by the American Institute of Certified Public Accountants (AICPA). The accounting firm will provide limited assurance, expressing their opinion on whether the financial statements are free of material misstatements or not and whether they comply with the Generally Accepted Accounting Principles (GAAP). 2. Interim Review Engagement Letter: Sometimes, businesses may require a review of their financial statements for a specific period, such as an interim period, rather than for an entire fiscal year. In such cases, an interim review engagement letter is used to specify the scope and extent of the review, including the procedures to be followed, reports to be issued, and limitations on the review. Some key elements typically included in Montana Engagement Letters for Review of Financial Statements by Accounting Firm are: 1. Parties involved: The engagement letter identifies the accounting firm and the client, stating their respective roles and contact information. 2. Objective and scope: It clearly defines the purpose of the engagement, whether it is a full review or interim review, along with the specific time period and financial statements to be reviewed. 3. Responsibilities: It outlines the responsibilities of both the accounting firm and the client during the engagement, including providing access to necessary documents, timely responses to requests for information, and cooperation throughout the review process. 4. Limitations of the review: The engagement letter highlights the limitations of a review engagement, clarifying that it does not provide a guarantee of the absolute accuracy of the financial statements, but rather provides limited assurance. 5. Fee structure and terms of payment: It specifies the fees for the engagement, whether it is based on a fixed fee or an hourly rate, and clarifies the payment terms and conditions. 6. Confidentiality and ownership of work papers: The engagement letter usually includes provisions for maintaining the confidentiality of client information and the ownership of work papers prepared during the review. It is important to note that engagement letter formats and specific language may vary depending on the accounting firm and the unique circumstances of each engagement. It is advisable to consult with a professional accountant or legal advisor to ensure compliance with all relevant regulations and to tailor the engagement letter accordingly.
