Comprehensive financial statement audit, review and compilation for your organization.
A financial statement review provides limited assurance about the accuracy and completeness of an entity’s financial statements. Unlike a comprehensive audit, a financial statement review primarily relies on analytical procedures and inquiries to pinpoint areas that may need further clarification. For Canadian public companies, these reviews support financial transparency and help maintain investor confidence.
Financial statement reviews for Canadian public companies are conducted according to standards set by Canadian regulators, such as the Canadian Public Accountability Board (CPAB). These reviews deliver a reasonable level of confidence in financial statement accuracy without the extensive procedures of a full audit, striking a balance between credibility and efficiency.
Key purposes of financial statement reviews include:
Ensuring financial records are accurately presented and reflect the true financial performance of the company.
Providing stakeholders with a reasonable assurance that financial statements are reliable, fostering investor confidence.
Helping companies meet the requirements of regulatory agencies, including the CPAB and the Ontario Securities Commission (OSC).
The CPAB oversees financial statement review standards to uphold high quality and integrity. While reviews are less extensive than full audits, CPAB ensures they adhere to professional standards that benefit stakeholders.
Documentation Standards
Firms conducting reviews must keep comprehensive records that show how the review was performed and any areas of concern.
Analytical Procedures
CPAB mandates specific analytical checks to ensure data consistency, including industry benchmark comparisons.
Issue Resolution
Any discrepancies identified during the review are thoroughly investigated, with follow-up procedures to address and resolve them.
A financial statement review differs significantly from a full audit in scope, methodology, and the level of assurance it provides. While both serve to instill confidence, a full audit offers greater reliability.
Scope of Procedures
A review involves limited procedures, primarily inquiries and analytical procedures, whereas an audit includes a detailed examination of financial records, internal controls, and tests of transactions.
Level of Assurance
A review provides limited assurance, which means there is a moderate level of confidence that the financial statements are free of material misstatement. In contrast, an audit provides a high level of assurance, indicating that the financial statements have been thoroughly examined.
Reliability
While reviews offer a reasonable basis for relying on financial statements, they do not offer the same degree of reliability as audits, making them less suitable for situations that require a high level of assurance, such as initial public offerings (IPOs).
Cost and Time Investment
Reviews are generally less costly and time-consuming compared to audits, making them a more budget-friendly option for companies that do not need full assurance.
Regulatory Requirements
Public companies may be required by regulatory bodies to perform audits rather than reviews, particularly in sectors with stringent compliance needs.
The process of conducting a financial statement review typically involves several key steps:
Engagement Planning
The accounting firm establishes the scope and objectives of the review engagement, including determining which financial statements will be reviewed.
Analytical Procedures
The reviewer performs analytical procedures to identify any trends, anomalies, or inconsistencies in the financial data.
Management Inquiries
Inquiries are made of the company’s management to obtain explanations for any unusual or unexpected variances noted during the review.
Review of Supporting Documents
Limited examination of supporting documents may be performed to verify that the financial information is consistent with the records maintained by the company.
Preparation of Review Report
A review report is prepared, summarizing the findings of the engagement and providing limited assurance that the financial statements are free from material misstatement.
Canadian public companies are subject to specific regulatory requirements when it comes to financial statement reviews. The CPAB, along with other regulatory bodies such as the OSC, has established guidelines that public companies must follow to ensure the transparency and accuracy of their financial reporting.
Some of the key regulatory considerations include:
Financial statements must be prepared in accordance with IFRS to ensure consistency and comparability with other public companies.
Public companies must ensure that their reviewed financial statements are filed on time to comply with regulatory deadlines.
Adequate disclosure of any issues identified during the review process is required to ensure transparency with investors and stakeholders.
Financial statement reviews provide Canadian public companies with a valuable tool to assure stakeholders of the accuracy of financial statements. While less extensive than a full audit, a review ensures that financial statements meet applicable standards and regulatory requirements. By adhering to CPAB guidelines and utilizing targeted analytical procedures, companies can reinforce their commitment to transparency and accountability, ultimately fostering investor trust and market confidence.
Our CPAB-registered team at Dimov Audit is committed to delivering high-quality review engagements tailored to Canadian public companies. Contact us today to learn how our financial statement review services can support your organization’s compliance, efficiency, and credibility in financial reporting.
Our dedicated team is ready to assist you on your path to financial success.
2021 Fillmore St
Suite 9141
San Francisco, CA 94115
2021 Fillmore St
Suite 9141
San Francisco, CA 94115