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.
New Hampshire Engagement Letter for Review of Financial Statements by Accounting Firm An engagement letter is a formal agreement between a client and an accounting firm for the review of financial statements. In the state of New Hampshire, specific guidelines and regulations govern the engagement letter for the review of financial statements. This document outlines the scope of the engagement, responsibilities of both parties, and the terms of the engagement. The purpose of a review engagement is to provide limited assurance regarding the financial statements. The accounting firm conducts an analytical procedure and makes inquiries to obtain the necessary evidence for a review. Unlike an audit, a review does not require a comprehensive examination of the records. Key elements of a New Hampshire engagement letter for the review of financial statements include: 1. Identification of Parties: The engagement letter states the names and addresses of both the client and the accounting firm involved in the engagement. It is essential to clearly define who the client is to avoid any confusion. 2. Objective and Scope: The engagement letter outlines the objectives and scope of the review engagement. This includes specifying that the engagement is in compliance with New Hampshire rules and regulations governing such engagements. 3. Responsibilities of the Accounting Firm: The letter describes the responsibilities of the accounting firm during the review process. This includes obtaining an understanding of the entity's business, assessing risks, and performing necessary procedures to provide limited assurance. 4. Responsibilities of the Client: The engagement letter also outlines the client's responsibilities, such as providing accurate and complete financial records and granting access to relevant personnel or documents. 5. Financial Reporting Framework: The engagement letter states the financial reporting framework used for the review, which must comply with the Generally Accepted Accounting Principles (GAAP). 6. Communication: The letter includes provisions for communication between the accounting firm and the client. It may specify regular meetings or progress updates to ensure effective collaboration throughout the engagement. 7. Limitations: The engagement letter highlights the inherent limitations of a review engagement. This clarifies that a review does not provide absolute assurance, and users of the financial statements may require additional information or examination. Different types of New Hampshire engagement letters for the review of financial statements by accounting firms may vary depending on factors such as the size and complexity of the client's business, industry-specific regulations, or specific reporting requirements. Some possible types of engagement letters in New Hampshire include: 1. Standard Engagement Letter: This type of engagement letter is used for most routine review engagements in compliance with generally accepted auditing standards and New Hampshire regulations. 2. Industry-Specific Engagement Letter: Certain industries, such as financial institutions or healthcare organizations, may have unique reporting requirements. In such cases, an industry-specific engagement letter is tailored to meet those specific needs. 3. High-Risk Engagement Letter: For clients with a higher risk profile, such as entities experiencing financial difficulties or involved in complex transactions, a special engagement letter addressing those risks may be necessary. 4. Nonprofit Organization Engagement Letter: Engagements involving nonprofit organizations often require specific procedures and reporting standards. An engagement letter for nonprofit organizations would outline the additional considerations and compliance requirements. In conclusion, a New Hampshire engagement letter for the review of financial statements by an accounting firm is a crucial document that establishes the terms and expectations of the engagement. It ensures that both the client and the accounting firm are aligned and understand their respective responsibilities throughout the review process. Different types of engagement letters may exist based on factors such as industry-specific requirements or the complexity of the client's business.
