Attest Engagements: Understanding the Differences

When it comes to financial reporting, businesses have three main options for attest engagements, each offering a different level of assurance. Keep reading to find the attest engagement that best suits your business needs.

• Audit: The most thorough option, an audit can provide reasonable assurance about the accuracy of the financial statements. During an audit, tests and verifications of financial data are performed, and an opinion is issued on the reliability of the statements. An audit is ideal for companies needing a high level of assurance, and an audit may be required by financial, licensing, or bonding institutions.

• Review: Less extensive than an audit, a review offers limited assurance. During a review, inquiry and analytical procedures are performed to identify any material changes needed, but this type of engagement does not extensively test the underlying data. A review is suitable for businesses needing moderate assurance that does not rise to the level of an audit.

• Compilation: The most basic service, a compilation involves the organization of financial data without providing any assurance. This type of engagement is typically used for internal purposes or when external parties do not require assurance.

Choosing the right attest engagement depends on your business needs and the level of assurance required by the users of your financial statements. Pro tip: be sure to fully understand the needs of your financial statement users before engaging in an attest engagement. You can do this by reading your debt agreements thoroughly as requirements related to acceptable attest engagements can change year to year, or you can simply check in with your financial statement users annually to confirm the level of assurance required. If you have any questions related to attest engagements, please reach out to your Wilkins Miller advisor.