What are Reviewed Financial Statements?

<h1>What are Reviewed Financial Statements?</h1>Author: <a title="Neil Rischall" href="http://www.articlesbase.com/authors/neil-rischall/119282.htm">Neil Rischall</a> All organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Financial statements enable management to make business decisions, enable creditors to evaluate loan applications, and provide individuals with information to make investment decisions. <a href="http://www.cpabookkeepers.com/audited-financial-statements.html" target="_blank">Financial statements</a> provide information from an organization’s accounting documents about their economic resources and obligations on a specific date, as well as their financial activities over a period of time. Financial statements are usually prepared in accordance with Generally Accepted Accounting Principles (GAAP), which are the standards issued by the American Institute of Certified Public Accountants (AICPA), but they may also be prepared on other comprehensive basis of accounting, such as cash basis or tax basis, depending on the needs of the users of the financial statements. The middle level of assurance in regards to financial statements is <a href="http://www.cpabookkeepers.com/reviewed-financial-statements.html" target="_blank">reviewed financial statements</a>. A Certified Public Accountant (CPA) must obtain a reasonable basis for expressing limited assurance that the financial statements meet the requirements of the US GAAP are free of material misstatements or false/missing information. To perform the review, the <a href="http://www.cpabookkeepers.com" target="_blank">CPA</a> must obtain a general understanding of: the organization’s industry as well as information about their operations, products, and services, their accounting records, qualifications of their accounting personnel, the accounting basis on which the financial statements are presented, and the form and content of the financial statements. The auditor then reviews the information supplied by the client and makes specific inquiries relating to accounting policies, record keeping and accounting practices, actions of the Board of Directors, and changes in business activities. The specific inquiries required to perform a review should address the following areas: related party transactions; accounting policies, problems, and areas of greater risk; uncertainties, contingent, current and long-term liabilities and assets; qualifications of accounting personnel and division of accounting duties; inventory; any departures from GAAP; revenues, expenses, accounts receivable, cash and equity accounts, and investments;  and property, plant, and equipment assets and liabilities. The auditor then applies various analytical procedures to identify unusual items or trends in the financial statements that may need explanation. If any material errors or misstatements are noted, the CPA will discuss these items with the organization's management for clarification or adjustments to the financial statements. Upon completion of a review, the CPA will issue a report that provides limited assurance that the financial statements are free of material misstatements or false/missing information and are found to be accurate, complete and fairly presented to meet the requirements of the US GAAP.  Since the financial statements were reviewed and not audited, no opinion about their nature is expressed. The report also notes that the financial statements are a representation of management. Reviewed financial statements can also be done on Other Comprehensive Basis of Accounting (OCBOA), such as a tax or cash basis, as long as the basis used is documented in the report.About the Author: Neil Rischall is the CPA behind the CPABookkeepers site which has a wealth of information about <a href="http://www.cpabookkeepers.com/reviewed-financial-statements.html">audited financial statements</a> as well as all services provided by a <a href="http://www.cpabookkeepers.com">Certified Public Accountant</a>.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/accounting-articles/what-are-reviewed-financial-statements-1291090.html" title="What are Reviewed Financial Statements?">What are Reviewed Financial Statements?</a>

All organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Financial statements enable management to make business decisions, enable creditors to evaluate loan applications, and provide individuals with information to make investment decisions.

Financial statements provide information from an organization’s accounting documents about their economic resources and obligations on a specific date, as well as their financial activities over a period of time. Financial statements are usually prepared in accordance with Generally Accepted Accounting Principles (GAAP), which are the standards issued by the American Institute of Certified Public Accountants (AICPA), but they may also be prepared on other comprehensive basis of accounting, such as cash basis or tax basis, depending on the needs of the users of the financial statements.

The middle level of assurance in regards to financial statements is reviewed financial statements. A Certified Public Accountant (CPA) must obtain a reasonable basis for expressing limited assurance that the financial statements meet the requirements of the US GAAP are free of material misstatements or false/missing information.

To perform the review, the CPA must obtain a general understanding of: the organization’s industry as well as information about their operations, products, and services, their accounting records, qualifications of their accounting personnel, the accounting basis on which the financial statements are presented, and the form and content of the financial statements. The auditor then reviews the information supplied by the client and makes specific inquiries relating to accounting policies, record keeping and accounting practices, actions of the Board of Directors, and changes in business activities. The specific inquiries required to perform a review should address the following areas: related party transactions; accounting policies, problems, and areas of greater risk; uncertainties, contingent, current and long-term liabilities and assets; qualifications of accounting personnel and division of accounting duties; inventory; any departures from GAAP; revenues, expenses, accounts receivable, cash and equity accounts, and investments; and property, plant, and equipment assets and liabilities.

The auditor then applies various analytical procedures to identify unusual items or trends in the financial statements that may need explanation. If any material errors or misstatements are noted, the CPA will discuss these items with the organization's management for clarification or adjustments to the financial statements.

Upon completion of a review, the CPA will issue a report that provides limited assurance that the financial statements are free of material misstatements or false/missing information and are found to be accurate, complete and fairly presented to meet the requirements of the US GAAP. Since the financial statements were reviewed and not audited, no opinion about their nature is expressed. The report also notes that the financial statements are a representation of management. Reviewed financial statements can also be done on Other Comprehensive Basis of Accounting (OCBOA), such as a tax or cash basis, as long as the basis used is documented in the report.

Neil Rischall is the CPA behind the CPABookkeepers site which has a wealth of information about audited financial statements as well as all services provided by a Certified Public Accountant.

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