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.
San Antonio, Texas Engagement Letter for Review of Financial Statements by Accounting Firm Introduction An engagement letter is a crucial document that outlines the terms and conditions of the professional relationship between an accounting firm and its client. In the context of San Antonio, Texas, an engagement letter for the review of financial statements by an accounting firm plays a vital role in ensuring compliance with industry regulations and maintaining transparency in financial reporting. Various types of engagement letters may exist based on the specific scope and purpose of the review. Let's explore the content typically included in a San Antonio, Texas engagement letter for the review of financial statements by an accounting firm. 1. Contact Information The engagement letter begins with the accounting firm's contact information, including the name, address, phone number, and email address. It also includes the client's contact details to establish clear communication channels between the parties involved. 2. Objective and Scope of Review This section defines the purpose of the engagement and the boundaries within which the review will be conducted. It outlines the accounting firm's responsibilities, such as conducting a review of the financial statements, and clarifies that the review does not constitute an audit or an assurance of financial statements' accuracy. 3. Basis for Review The engagement letter explains the accounting firm's responsibilities and the framework (e.g., Generally Accepted Accounting Principles — GAAP) upon which the financial statements will be reviewed. It is crucial to mention that the firm will not express an opinion on the financial statements but will provide limited assurance on their conformity with the applicable reporting framework. 4. Management Responsibilities This section outlines the client's responsibilities, which typically include providing accurate financial statements, maintaining internal controls, and making all necessary disclosures. It emphasizes the client's duty to provide complete and reliable information to enable an effective review process. 5. Timeline and Deliverables The engagement letter includes an estimated timeline for the completion of the review and specifies any specific deadlines that both the accounting firm and the client must adhere to. It also outlines the expected deliverables, such as a review report detailing the accounting firm's findings and observations. 6. Fees and Payment Terms This section describes the fees associated with the review engagement, including the hourly rates for professional services, travel expenses (if applicable), and any other costs incurred during the review. It also clarifies the payment terms, such as the frequency of billing and acceptable payment methods. 7. Confidentiality and Data Security The engagement letter should address the confidentiality of client information and highlight the accounting firm's commitment to complying with relevant data protection laws and regulations. It may include provisions regarding the non-disclosure of sensitive information and the use of appropriate security measures to safeguard client data. Types of San Antonio, Texas Engagement Letters for Review of Financial Statements by Accounting Firm 1. General Purpose Engagement Letter: This type of engagement letter is suitable for most clients and involves a review of financial statements prepared under the applicable reporting framework. 2. Sector-Specific Engagement Letter: Certain industries, such as healthcare, oil and gas, or real estate, may require engagement letters tailored to address unique sector-specific requirements. These letters highlight additional regulations or reporting standards relevant to the industry. 3. Limited Scope Engagement Letter: For smaller organizations or specific projects, a limited scope engagement letter may be appropriate. It defines a narrower scope of work, such as reviewing specific accounts or transactions, rather than the entire financial statement. Conclusion San Antonio, Texas engagement letters for the review of financial statements by accounting firms establish a framework for conducting a review and foster a clear understanding of responsibilities between the firm and the client. By addressing key areas within an engagement letter, both parties can ensure a smooth and efficient review process while adhering to professional standards and regulatory requirements.San Antonio, Texas Engagement Letter for Review of Financial Statements by Accounting Firm Introduction An engagement letter is a crucial document that outlines the terms and conditions of the professional relationship between an accounting firm and its client. In the context of San Antonio, Texas, an engagement letter for the review of financial statements by an accounting firm plays a vital role in ensuring compliance with industry regulations and maintaining transparency in financial reporting. Various types of engagement letters may exist based on the specific scope and purpose of the review. Let's explore the content typically included in a San Antonio, Texas engagement letter for the review of financial statements by an accounting firm. 1. Contact Information The engagement letter begins with the accounting firm's contact information, including the name, address, phone number, and email address. It also includes the client's contact details to establish clear communication channels between the parties involved. 2. Objective and Scope of Review This section defines the purpose of the engagement and the boundaries within which the review will be conducted. It outlines the accounting firm's responsibilities, such as conducting a review of the financial statements, and clarifies that the review does not constitute an audit or an assurance of financial statements' accuracy. 3. Basis for Review The engagement letter explains the accounting firm's responsibilities and the framework (e.g., Generally Accepted Accounting Principles — GAAP) upon which the financial statements will be reviewed. It is crucial to mention that the firm will not express an opinion on the financial statements but will provide limited assurance on their conformity with the applicable reporting framework. 4. Management Responsibilities This section outlines the client's responsibilities, which typically include providing accurate financial statements, maintaining internal controls, and making all necessary disclosures. It emphasizes the client's duty to provide complete and reliable information to enable an effective review process. 5. Timeline and Deliverables The engagement letter includes an estimated timeline for the completion of the review and specifies any specific deadlines that both the accounting firm and the client must adhere to. It also outlines the expected deliverables, such as a review report detailing the accounting firm's findings and observations. 6. Fees and Payment Terms This section describes the fees associated with the review engagement, including the hourly rates for professional services, travel expenses (if applicable), and any other costs incurred during the review. It also clarifies the payment terms, such as the frequency of billing and acceptable payment methods. 7. Confidentiality and Data Security The engagement letter should address the confidentiality of client information and highlight the accounting firm's commitment to complying with relevant data protection laws and regulations. It may include provisions regarding the non-disclosure of sensitive information and the use of appropriate security measures to safeguard client data. Types of San Antonio, Texas Engagement Letters for Review of Financial Statements by Accounting Firm 1. General Purpose Engagement Letter: This type of engagement letter is suitable for most clients and involves a review of financial statements prepared under the applicable reporting framework. 2. Sector-Specific Engagement Letter: Certain industries, such as healthcare, oil and gas, or real estate, may require engagement letters tailored to address unique sector-specific requirements. These letters highlight additional regulations or reporting standards relevant to the industry. 3. Limited Scope Engagement Letter: For smaller organizations or specific projects, a limited scope engagement letter may be appropriate. It defines a narrower scope of work, such as reviewing specific accounts or transactions, rather than the entire financial statement. Conclusion San Antonio, Texas engagement letters for the review of financial statements by accounting firms establish a framework for conducting a review and foster a clear understanding of responsibilities between the firm and the client. By addressing key areas within an engagement letter, both parties can ensure a smooth and efficient review process while adhering to professional standards and regulatory requirements.
