What is a reviewed financial statement?
A set of financial statements a CPA has given limited assurance on. Under the AICPA's review standards, at AR-C section 90, the accountant reports whether they are aware of any material modifications needed for the statements to conform to the framework used to prepare them, such as GAAP.
The accountant gives what the standards call negative assurance: they state in the report that nothing came to their attention that would need a material change, and they do not confirm that your numbers are right.
Audit procedures are not part of a review. The accountant does not:
- Verify calculations
- Trace transactions
- Confirm bank balances
- Count inventory
- Test internal controls
Under the standards, the reviewing firm must also be independent, so a firm that keeps your books may not be able to give assurance on them.
What a review of financial statements template contains
Six parts, in order:
- Accountant's review report, the signed conclusion
- Balance sheet
- Statement of income
- Statement of changes in equity
- Statement of cash flows
- Notes to the financial statements
Do you need an audit if the bank asked for verified financials?
The belief.
The bank asked for verified financials, so we need an audit.
What is true.
Lenders write the required level into the loan covenant. Where the lender wrote reviewed statements into it, you can give the lender a review, which costs less because the accountant does no substantive testing.
Why it costs money.
In an audit the accountant performs substantive testing that is not part of a review, so you pay for procedures the lender did not ask for.
Compilation, review or audit: which does your lender, investor or landlord need?
A bank or lender.
Read the covenant. Lenders write in the level they will accept, and some move the requirement up to an audit once you borrow more than a stated figure.
An investor or board.
Investors ask for reviewed statements once outside money is in, and for an audit at larger round sizes.
A landlord, franchisor or surety.
These parties name a level in the lease, franchise agreement or bond, so check the contract before commissioning anything.
A buyer, in a sale.
A buyer's diligence team asks for more than you get from a review, so ask them what they will rely on before you commission one.
Does a New York charity need a review or an audit under Article 7-A?
Charities registered with the Charities Bureau under Article 7-A do not choose the level. Under Executive Law section 172-b, the Attorney General requires a level of assurance based on total revenue and support, reported on Form CHAR500.
- Not more than $250,000: an unaudited financial report
- More than $250,000 and up to $1 million: an independent CPA's review report
- Over $1 million: an independent CPA's audit report
The audit threshold was raised from $750,000 to $1 million on July 1, 2021. Because each year's revenue and support is measured on its own, an organization can need a review one year and an audit the next.
The Charities Bureau requires Article 7-A registrants, and DUAL registrants who file under both Article 7-A and the Estates, Powers and Trusts Law, to submit the CHAR500 four and a half months after the fiscal year ends. The Bureau grants an automatic 180-day extension with no written request, and it can still deny one at its discretion.
The Attorney General can also require an audit from an organization above $250,000 after reviewing its filings, even where revenue is under the $1 million audit line.
Example: a charity with a June 30 year end
| Fiscal year ended | Total revenue and support | Report required | CHAR500 due (with automatic extension) |
|---|---|---|---|
| June 30, 2025 | $900,000 | Independent CPA's review | November 15, 2025 (May 15, 2026) |
| June 30, 2026 | $1,200,000 | Independent CPA's audit | November 15, 2026 (May 15, 2027) |
Crossed a threshold this year?The level changes and the timetable does not. Call (212) 641-0673 or send the contact form.
What do you need before a financial statement review can start?
The accountant reviews completed financial statements, not a folder of bank statements, because in analytical procedures the accountant compares one set of figures against another. You need:
- A trial balance and general ledger that agree to your tax return
- Balance sheet, income statement and statement of cash flows
- Bank and card statements for every account, all year
- Fixed asset schedules, accounts receivable and payable, payroll filings, loans and leases
If any of these are missing, we start with a bookkeeping or clean-up engagement and tell you so before you are on a lender's timetable. If your books are on a cash basis and the bank wants accrual statements, we convert them to GAAP first.
What happens during a financial statement review?
Five steps, in order:
- 1
Engagement letter and independence check. We confirm the scope, the framework and that we are independent of your bookkeeping.
- 2
You send the statements. Completed financial statements and the supporting schedules.
- 3
Inquiry and analytical procedures. We ask management about the figures and compare them with the prior year, the budget and expected ratios.
- 4
Management representation letter. You sign a letter confirming the statements and the answers you gave.
- 5
Review report. We issue the signed review report with the statements and notes.
Allow more time for a first-year review, because we also establish opening balances.
George Dimov, CPA is enrolled in the AICPA Peer Review Program, which New York requires of firms that issue review reports.
What financial review services cost
Priced on what is in your draft statements. What we quote against:
- 1Annual gross income, since a larger business means more procedures.
- 2Entity structure: a single entity or a consolidated group.
- 3The condition of the ledger, and whether clean-up comes first.
- 4Items that need specialist work: construction work in progress, crypto, foreign currency.
- 5Whether this is a first-year review, which adds opening balances.
A single entity with a clean ledger and none of the specialist items is at the low end, priced as a flat fee. A consolidated group with work in progress or foreign currency is at the high end, quoted individually.
We read the draft statements first and quote before any work starts. The fee is fixed and in writing, and we change it only if the scope changes, with your sign-off. If a loan closing is waiting, say so.
Related services
- Audit and attestation
- Bookkeeping
- Corporate and partnership taxation
- Merger and acquisition consulting
- Business taxes
General information, not advice for your circumstances.
Client reviews
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We read them first and price from what is there. If the books are not ready we will say so before anybody starts. Call (212) 641-0673 or send the contact form.
Reviewed by George Dimov, CPA, New York, NY. Assurance and financial reporting, in all 50 states.