Video: Introduction to Preparation, Compilation, and Review Engagements and Reports

In this lesson, an introduction to preparation, compilation, and review engagements and reports is provided. These types of engagements are presented as alternatives to audits, offering more affordable options for smaller companies that do not require an audit. The lesson discusses the differences between each engagement type. In a preparation engagement, the CPA helps prepare financial statements without expressing an opinion, acting as an outsourced accountant. In a compilation engagement, the CPA compiles financial statements from management-provided information but does not express an opinion. Lastly, in a review engagement, the CPA reviews the financial statements and expresses an opinion on whether the statements are free of material misstatement. The lesson emphasizes understanding the distinctions between these three types to choose the appropriate engagement depending on the client's needs.