The objective of a financial “review” conducted by an independent auditor is to examine the nonprofit’s financial statements and determine whether the financial statements are consistent with generally accepted accounting principles.
A review shares the goals of an audit, however, a review is not conducted with the same level of investigation or analysis as an independent audit.
During a review, the auditor examines the financial statements but does not conduct an examination of the nonprofit’s internal controls (which is normally included in the scope of an independent audit). Instead the review provides a limited level of assurance that the financial statements are free of misrepresentations.
The auditor’s report after a review will note whether the auditor is aware of any “material modifications” that should be made to the financial statements. The report after a review is not considered to provide a professional opinion about the nonprofit’s financial statements as a whole.
The key difference between an audit and a review is that conducting an audit requires the auditor to obtain independent confirmation or verification of the financial information examined.
