Reviewed financial statements have been examined by a CPA through analytical procedures and inquiries — not a full audit. The CPA provides limited assurance that no material modifications are needed.
A review engagement sits between a compilation (no assurance) and an audit (positive assurance). The CPA performing the review applies analytical procedures to the financial data (comparing ratios, trends, and amounts to industry norms and prior periods) and inquires of management about accounting policies and significant transactions. No independent verification of account balances with third parties (as in an audit) is performed. The CPA's review report states that nothing came to the accountant's attention causing them to believe the statements are not presented fairly in conformity with GAAP (or another applicable framework). This is 'limited assurance' or 'negative assurance' — not the positive 'presents fairly' opinion of an audit. Reviewed statements cost significantly less than audits — typically $5,000–$25,000 for small businesses depending on complexity. They're completed faster (weeks vs. months) and with less disruption to management time. For SBA lending and conventional bank loans below $5M, reviewed statements are commonly accepted alongside tax returns. Many bank lenders set their review requirement at loans above $500K–$1M and below $3M–$5M (where audits apply). Non-bank lenders often accept compiled statements or tax returns alone.
Reviews are typically required by lenders for mid-size loan requests ($500K–$5M range) or when the lender's policy specifies it. Reviews are also common for businesses with investors or boards who want assurance but don't require full audit rigor. Absent a specific requirement, many businesses choose reviews as a cost-effective middle ground.
Yes. Any fiscal year can be reviewed by a CPA firm regardless of whether previous years were compiled. Lenders typically require 2–3 years of financial statements, so you may need to have multiple years reviewed for a new loan application. CPA firms can often review prior years from existing records.
Lenders view reviewed statements as substantially more credible than compilations, but less so than audits. For SBA and conventional loans under $5M, a review is typically sufficient. For larger facilities, sophisticated lenders, or borrowers with complicated financials, lenders escalate to audit requirements. The review's limited assurance means the CPA found nothing obviously wrong — not that everything is verified.