An Agreement between a Cpa and Her Client (Company) to Perform a Review Is Called

When a Certified Public Accountant (CPA) is hired by a company to perform an assessment of their financial statements, there are different levels of assurance that can be provided. One of these levels is called a review, and the agreement between the CPA and the company to perform this service is known as a review engagement.

A review engagement is a limited assurance engagement where the CPA performs analytical procedures and inquiries to assess whether the financial statements are free from material misstatements. This level of assurance is lower than an audit, which provides a higher level of assurance, but higher than a compilation, which provides no assurance at all.

During a review engagement, the CPA will ask the company`s management questions about their accounting practices and review the financial statements for any inconsistencies or errors. The CPA will then provide a report stating that they have performed a review and that they have not come across any material misstatements in the financial statements. However, since a review is a limited assurance engagement, the report cannot provide absolute assurance that all statements are accurate.

The agreement between the CPA and the company to perform a review engagement is a vital step in ensuring that a company`s financial statements are reliable. It helps the company`s stakeholders to have confidence in the information being reported and may be required by lenders or investors before they agree to provide financing.

In conclusion, a review engagement is an essential service provided by CPAs to help ensure the accuracy and reliability of a company`s financial statements. The agreement between a CPA and a company to perform this service is known as a review engagement. It is a critical step in the financial reporting process and helps to build trust and confidence in the company`s stakeholders.

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