Compilation
Review
Audit
Engagement
Engagement**
Engagement
1. Level of Assurance
No assurance as to GAAP
Limited assurance as to
GAAP Statements are
fairly
presented in accordance
with GAAP.
2. Entities Covered Nonpublic only Nonpublic only Public or Nonpublic
3. Knowledge of Client's
Knowledge of the
accounting Knowledge same as
compila-
Extensive knowledge of the
Industry
principles and practices of the tion plus
an increased under-
economy, the relevant indus-
industry and general under-
standing of the
client's business. try, and
the client's business.
standing of the client's business.
(SAS No.22)
4. Inquiry procedures
Inquiries not required unless
Inquiry and analytical
procedures Inquiry, analytical
procedures
required
information supplied by the
required plus
additional proce-
(SAS
No.56), and other audit
client is questionable.
dures if the information appears
procedures.
questionable.
5. GAAP disclosures
Substantially all
disclosures All
disclosures required by GAAP Inadequate
disclosure requires
omitted
required by GAAP may be
must be
included or report must
qualified or adverse opinion.
omitted, without restriction
be modified
to include the dis-
on use (Exception, see
closures.
SSARS No. 3)
6. Known departures from
Disclosure required in modi-
Disclosure required in
modified Departure
from GAAP requires
GAAP measurement
fied compilation
report (Ex- review
report.
qualified or adverse opinion.
ception, see SSARS No. 3)
7. Accountant's
Accountant does not have
Lack of
independence precludes
Nonpublic company - comp-
independence
to be independent
issuing review report
ilation report (SSARS No.1) if
not independent.
Public company- nonindepen-
dence disclaimer (SAS No. 26)
if not independent.
8. Obtain an understand-
Not required
Not required
Required by SAS No. 55
ing of the control struc-
ture and assess control
risk.
9. Engagement Letter Recommended Recommended Not discussed in SAS
10. Representation Letter No mention May wish to obtain Must obtain (SAS No. 19)
*Adapted from Dan M. Guy, "Disclosure Needs in Financial
Reporting for Closely Held Businesses," University of Alabama,
1978 Accounting Research Convocation
** Excludes interim reviews of public companies. See SAS No.
36. (However, Paragraph 140.03 describes a proposed ammendment to SSARS No. 1
to discuss situations when a SSARS review report may be
applicable to public entities.
Copyright 1998
Steven L. Jager, CPA, An Accountancy Corporation