Which statement best describes a financial review for a community association?

Which statement best describes a financial review for a community association?

• A. It is a full audit of the financial statements by an independent CPA.
• B. It is an internal management report with no CPA involvement.
• C. It is a year-end engagement by a CPA that provides limited assurance and includes no external verification of selected transactions.
• D. It requires external verification of all transactions.

Answer: (C)

A financial review is a limited-assurance engagement performed by a CPA at year-end, using inquiries and analytical procedures rather than extensive testing of the accounting records. It provides only limited assurance that the financial statements are free of material misstatements and does not include external verification of all transactions. This matches the description of a year-end engagement by a CPA that offers limited assurance and involves no broad external verification of selected transactions. The other descriptions describe level of work and involvement that differ from a review: a full audit involves thorough testing and external verification of transactions and internal controls; an internal management report with no CPA involvement isn’t a CPA engagement; and requiring external verification of all transactions goes beyond what a review provides.

A financial review is a limited-assurance engagement performed by a CPA at year-end, using inquiries and analytical procedures rather than extensive testing of the accounting records. It provides only limited assurance that the financial statements are free of material misstatements and does not include external verification of all transactions. This matches the description of a year-end engagement by a CPA that offers limited assurance and involves no broad external verification of selected transactions.

The other descriptions describe level of work and involvement that differ from a review: a full audit involves thorough testing and external verification of transactions and internal controls; an internal management report with no CPA involvement isn’t a CPA engagement; and requiring external verification of all transactions goes beyond what a review provides.