FKINP If a lender expressly requests reviewed financial statements, commission a CSRE 2400 limited-assurance review—but first confirm the exact wording, reporting period and deadline in the financing agreement.[1][2]
Confirm the lender’s reporting requirement
Copy the financing clause into the CPA brief and identify whether it requests compiled, reviewed or audited financial statements. According to Insight Accounting, a generic reference to “annual financial statements” does not necessarily require an audit, while an express audit requirement should not be replaced unilaterally with a review.[2]
Ask the lender to confirm in writing:
- the acceptable engagement level;
- the reporting framework and period;
- the intended recipient;
- the required documents and submission method; and
- the contractual delivery deadline.
A covenant may measure the deadline in days after year-end, but the applicable period comes from the financing agreement rather than a standard deadline.[2]
Insight Accounting says delivering reviewed statements when an audit is expressly required may lead to a covenant breach, waiver request, fee, tighter renewal terms or cross-default consequences in a syndicated facility.[2] It also says assurance requirements may sometimes be negotiated at signing, renewal, renegotiation or refinancing, potentially in exchange for interim statements, a borrowing-base certificate, a personal guarantee or additional collateral.[2]
Compare compilation, review and audit
Compilation
Assurance: None.[3][5][6]
Core work: The practitioner compiles management-provided information and issues a compilation engagement report, not a review conclusion or audit opinion.[3][5][6]
Suited to: Internal, tax or external reporting when the named lender accepts a no-assurance deliverable.[3][5][6]
Review
Assurance: Limited assurance about whether the financial statements as a whole are free from material misstatement.[1]
Core work: Primarily inquiries and analytical procedures, with additional procedures when necessary.[1]
Suited to: A lender or other user expressly requesting limited assurance without requiring an audit.[1][2][4]
Audit
Assurance: Reasonable rather than limited assurance.[2]
Core work: More extensive corroboration and testing, potentially including confirmations, inventory counts and internal-control testing.[2]
Suited to: An agreement expressly requiring audited statements, including some larger, syndicated or covenant-heavy facilities.[2]
No universal facility-size threshold determines the required engagement. The financing agreement and the lender’s written confirmation should control the choice.[2][6]
Put the CPA scope in writing
The CPA proposal or engagement document should identify:
- Engagement details: the legal entity, engagement level, reporting period, intended lender or other user, and applicable reporting framework.[2][3][5]
- Deliverables: the financial statements and review engagement report, how proposed adjustments will be communicated, what management will approve, and who will receive the final package.[1][5]
- Responsibilities: who provides records, answers questions, approves adjustments and submits the completed package.[5]
- Dates: the lender’s contractual deadline, management’s records-ready date and the CPA’s planned delivery date.[2][5]
- Commercial terms: the fee or pricing method, included work, additional-work charges, taxes, payment schedule and cancellation terms.[2][5][6]
Insight Accounting describes ASPE as the usual reporting framework for private companies, but the framework should be confirmed for the specific engagement rather than assumed.[2]
Prepare the year-end records
- Accounting records: Year-end trial balance, general ledger, prior-year financial information, bank and credit-card statements, accounts-receivable and accounts-payable details, fixed-asset records, payroll records where applicable, and GST/HST or QST information.[5]
- Year-end schedules: Inventory, prepaid expenses, accruals, depreciation, revenue and expense classifications, retained earnings and other equity accounts.[2][4]
- Reconciliations: Bank, accounts receivable, accounts payable and intercompany balances.[2]
- Financing and non-routine items: Loan statements and agreements, shareholder loans, related-party balances and unusual transactions.[2][5]
Ask the CPA for a tailored request list because the required records depend on the entity and engagement scope.[5] Insight Accounting says a review is generally faster than an audit of the same entity, but timing depends on how well the records are organized.[2]
Understand the limits of a CSRE 2400 review
A review seeks limited assurance about whether the financial statements as a whole are free from material misstatement.[1] The CPA obtains evidence primarily through inquiries and analytical procedures, adding other procedures when necessary.[1]
A review does not make the practitioner responsible for evaluating control design, determining whether controls were implemented or testing their operating effectiveness.[1] An audit provides reasonable assurance and may include bank or receivable confirmations, inventory counts and internal-control testing.[2]
Written representations may also provide review evidence, although the AASB’s April 2016 Basis for Conclusions does not set out the complete representation requirements.[1]
The review conclusion generally states whether anything came to the practitioner’s attention causing a belief that the statements are not, in all material respects, prepared in accordance with the applicable framework.[2] It is not an audit opinion or a guarantee that financing will be approved, renewed or continued.[1][2]
Set the questions, adjustments and approval workflow
A scoped workflow can cover records collection, clarification, proposed adjustments, management review, finalization and delivery.[5]
- Submit the records. Provide the agreed schedules and supporting documents by the records-ready date.
- Track questions. Use one log showing each request, the responsible person, the due date and the resolution.
- Resolve adjustments. Ask the CPA to explain each proposed adjustment and its effect. Update the trial balance for accepted adjustments before final approval.
- Complete management review. Compare the final figures and notes with the approved trial balance, review any required representations, and verify the lender’s name, reporting period and reporting framework.
- Finalize delivery. Identify whether management or the CPA sends the package, who confirms receipt and who handles an incomplete or rejected submission.
Confirm the report, dates and provider terms
The final package should contain the financial statements prepared under the agreed framework and the review engagement report. The CPA needs sufficient appropriate evidence to support the review conclusion and issue the report required by CSRE 2400.[1]
Record these dates:
- management’s records-ready date;
- deadlines for answering CPA inquiries;
- management’s approval date;
- the CPA’s planned report delivery; and
- the lender’s contractual deadline.[2][5]
What to confirm with the CPA
- the fee and whether it is fixed or based on another pricing method;
- included work and charges for additional work;
- applicable taxes, deposits and payment dates;
- cancellation or refund terms;
- assumptions behind the planned delivery date;
- the required report form and dating requirements; and
- the form, signatories and timing of management representations.
The cited Insight Accounting page does not state a review or audit fee. The cited CPA Firm Online page says fees depend on bookkeeping quality, entity complexity, adjustments, intended use and scope, with a written proposal provided before work starts.[2][5]
Complete a lender-compliance check before signing
Compare the financing clause, the lender’s written clarification and the CPA proposal. They should align on the engagement level, reporting framework, reporting period, intended user, deliverables and contractual deadline.[2][3][5]
If the agreement expressly requires an audit, seek the lender’s written acceptance before substituting a review. Insight Accounting warns that an unapproved substitution may trigger a covenant breach and related lender action.[2]
Choose the lowest assurance level the lender confirms will satisfy the agreement, then document the complete year-end scope, workflow, fees and delivery dates.[2][5]
References
- Engagements to Review Historical Financial Statements Basis for Conclusions (bccpa.ca)
- Audited or Reviewed for Lenders | Insight Accounting CPA (insightscpa.ca, 2026)
- What Is a CPA Compilation Report and Why Do Banks and Lenders Require It? – Gondaliya CPA (gondaliyacpa.ca, 2021)
- Financial statements in Canada | LM Law & CPA LLP (lmlawcpa.ca)
- Compilation Engagement: 6 Easy Steps for Your Business (cpafirmonline.ca)
- Compilation Experts on When Businesses Need Compilations – Custom Accounting & CFO Advisory | Saskatchewan (customcpa.ca)
