Independent Review
What is an independent review?
An independent review is an impartial, analytical assessment of an organisation’s annual financial statements. A review provides limited assurance and is generally less complicated, faster, and more cost-effective than a full audit.
Independent reviews are commonly undertaken by smaller SME’s and PBE’s where a full statutory audit is not mandatory, but the need to ensure financial transparency still remains.
How do independent reviews compare to audits?
An audit provides a reasonable level of assurance and involves more extensive substantive procedures, including detailed testing of accounting records, internal controls and year end balances. The auditor’s report expresses a positive opinion on whether the financial statements present a true and accurate picture of the organisation.
An independent review, by contrast, involves less time, fewer procedures and is designed to provide a level of assurance that is appropriate to engagements with a lower risk profile. For many smaller businesses and charitable organisations, this makes an independent review a cost-effective and risk-proportionate alternative to a full audit.
For charities and other PBE’s, the question of whether a full audit or an independent review is more appropriate will often depend on the organisation’s reporting tier as well as its total operating expenditure.
Why choose an independent review?
While an independent review does not involve the same extent of in-depth testing as an audit, it can still provide meaningful assurance. A review ensures that a qualified, independent professional has objectively assessed your financial statements, offering valuable oversight and helping to identify any areas for potential improvement.
Reviews are particularly beneficial for smaller charities and not-for-profit organisations at lower reporting tiers, where risk levels and annual operating expenditure do not warrant the cost of a full audit.
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Your organisation’s founding document or current constitution does not explicitly mandate a full audit of the annual financial statements.
Your organisation’s annual operating expenditure does not exceed the minimum statutory threshold for an audit.
Your organisation’s governance board has formally approved the decision to undergo an independent review instead of a full audit.
Your primary funders do not have specific audit requirements written into their funding agreements.
What’s in an independent reviewer’s report?
An independent reviewer’s report is similar to an audit report in the sense that it will convey our opinion as to whether the financial statements have been prepared in accordance with the applicable reporting framework, but while an audit report provides a positive expression of assurance (e.g. “In our opinion these financial statements present a true and fair view…”), an independent reviewer’s report provides a negative expression of assurance (e.g. “nothing has come to our attention that causes us to believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework…”). We will also provide a detailed account of the results of our procedures, including any areas of concern or internal control deficiencies requiring your attention. Our goal is always to work constructively with you to correct the issues and strengthen your reporting moving forward. We are here to help.
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