What is an Accounting Review, You Ask?
I’ve been asked to shed a little light on what an accountant’s review entails.? A review by an independent auditor is very limited in scope.? An independent audit is the most extensive attest service provided by auditors, and it is still limited. Audits are not designed to detect fraud, are not required to detect fraud, and most times do no detect fraud.
Reviews are even more limited in scope. They amount to auditors looking at account balances and determining whether or not the balances look reasonable. On occasion, they may ask to see some details about accounts and their balances, but this happens on a very limited basis.
As long as the auditors don’t see anything unusual or irregular, a client will generally pass the review with flying colors.
How might this be applied to something like an income tax issue? The auditors will likely look at the balances in the income tax expense account and the income tax liabilities account. If those balances look “reasonable” (i.e. not unusual) the auditors will likely not ask any further questions.
The moral of the story: An accounting review is a very low level of assurance that the financial statements are accurate.
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