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.
Montgomery Maryland Engagement Letter for Review of Financial Statements by Accounting Firm: A Comprehensive Overview In Montgomery, Maryland, an engagement letter is a critical document that outlines the terms and conditions between a client and an accounting firm for the review of financial statements. The engagement letter serves as a legally binding agreement that sets forth the scope of work, responsibilities, and expectations of both parties involved. The purpose of engaging an accounting firm for a review of financial statements is to provide limited assurance on whether the financial statements conform to the applicable financial reporting framework, such as Generally Accepted Accounting Principles (GAAP). This assurance helps the client and relevant stakeholders make informed decisions based on reliable financial information. There are several types of engagement letters specific to Montgomery, Maryland, that accounting firms may provide for the review of financial statements: 1. Standard Engagement Letter: This is the most common type of engagement letter used by accounting firms in Montgomery, Maryland, for the review of financial statements. The standard engagement letter outlines the general terms and conditions, including the scope of work, timeline, fee structure, and responsibilities of both the client and the accounting firm. 2. Engagement Letter for Nonprofit Organizations: This engagement letter is tailored for nonprofit organizations in Montgomery, Maryland. It addresses the specific needs and requirements of nonprofits, such as compliance with financial reporting standards specifically applicable to nonprofits, like the Financial Accounting Standards Board (FAST) Accounting Standards Codification (ASC) 958. 3. Engagement Letter for Government Entities: This type of engagement letter is designed to meet the unique needs of government entities based in Montgomery, Maryland. It takes into account the complexities of governmental accounting, such as compliance with Governmental Accounting Standards Board (GAS) pronouncements and regulations. 4. Engagement Letter for Small Businesses: Accounting firms in Montgomery, Maryland, may offer engagement letters specifically catering to small businesses. These engagement letters often provide flexibility in terms of scope and pricing to accommodate the limited resources and budget constraints typically associated with small businesses. Regardless of the type of engagement letter, it is important to mention that the letter should clearly specify the nature of the review engagement, the financial statements to be reviewed, any limitations on the review procedures, and the expected deliverables, such as the review report. When drafting an engagement letter for a review of financial statements in Montgomery, Maryland, accounting firms must consider the specific requirements of the client's industry, regulatory environment, and any applicable professional standards, such as the American Institute of Certified Public Accountants (AICPA) Statements on Standards for Accounting and Review Services (STARS). In conclusion, the engagement letter for a review of financial statements by an accounting firm in Montgomery, Maryland, serves as a crucial document that establishes the terms and conditions for the review engagement. It is tailored to meet the unique needs of different types of clients, including standard engagements, nonprofit organizations, government entities, and small businesses.
