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A review engagement in Canada gives limited assurance on your financial statements, which is less than an audit and more than none. The accountant mostly asks questions and compares numbers, so preparing means having clean books, answers ready and an explanation for anything that moved. The standard behind it is CSRE 2400, effective for periods ending on or after December 14, 2017.
What is a review engagement, and how is it different from an audit?
An audit aims at reasonable assurance that the statements are free of material misstatement. A review aims lower. CPA Canada describes the work as inquiry, discussion and analytical procedures rather than the deeper testing of an audit.
| Audit | Review | |
|---|---|---|
| Assurance level | Reasonable | Limited |
| Canadian standard | Canadian Auditing Standards (CAS) | CSRE 2400 |
| Main methods | See the CAS | Inquiry and analytical procedures |
We couldn’t confirm typical fees or timelines from an official source, so we’ve left them out. Ask for a written quote and scope.
Who asks for a review?
Someone outside the business, usually: a lender, an investor, a landlord or a grant program. They decide what level of assurance they want, and it’s in their paperwork.
Read the exact wording. “Reviewed statements” and “audited statements” aren’t interchangeable, and finding out late is expensive.
If the business is a federal corporation, the CBCA lets shareholders of a non-distributing corporation resolve not to appoint an auditor, but only if every shareholder agrees, and only until the next annual meeting. A review is not that resolution. It’s a separate service people sometimes choose where no audit is required.
How do you prepare for a review engagement in Canada?
Get the year closed first. That means bank accounts reconciled, receivables and payables listed, payroll remittances matched to your records and the trial balance final before anyone arrives. An accountant who’s asking about your numbers on day one shouldn’t find an unfinished ledger.
Then decide which framework the statements use. Private enterprises can choose ASPE (Part II of the CPA Canada Handbook) or IFRS (Part I). Which one fits is a decision for you and your accountant, and it belongs before year-end, not after.
Pull the documents together in one folder: bank statements, loan agreements, the fixed-asset list, share records and minutes. The CRA’s rule is to keep records six years from the end of the last tax year they relate to, and some, like share registers, indefinitely, so most of this should exist already.
What will the reviewer ask about your numbers?
Expect questions on anything that changed. Analytical procedures compare this year to last year and to what makes sense for your business. If your gross margin slips, you’ll be asked why.
Here’s a case. Last year you sold an item at $900 with a cost of $630, a 30.0% gross margin. This year the cost rose to $648 on the same price, and the profit margin calculator shows 28.0%. A two-point drop is small, but you should be able to say it came from supplier costs and not from a mispriced sale or a missing invoice. Run your own comparison with the percentage calculator, and check whether an investment behind a big balance made sense with the ROI calculator.
Mistakes that slow a review down
Handing over books that don’t reconcile is the classic one. So is a missing explanation for a large one-off entry, such as a shareholder loan or a bonus paid after year-end. Don’t guess at answers either. “I’ll check and send it tomorrow” costs less than a wrong statement to your reviewer.
Don’t expect a review to do an audit’s job. Limited assurance is limited. And if your tax figures come into it, the corporate tax calculator gives a rough estimate only, since it ignores credits and handles associated corporations only through an optional box.
Where the numbers come from
The CSRE 2400 effective date and description come from CPA Canada and CPA British Columbia pages. The shareholder audit exemption is from section 163 of the Canada Business Corporations Act. Record-keeping periods are from the Canada Revenue Agency. The margin example comes from our own calculator.
Frequently asked questions
What is a review engagement in Canada?
It's an accountant's check of your financial statements that gives limited assurance. The work is mainly inquiry and analytical procedures under CSRE 2400.
Is a review the same as an audit?
No. An audit aims at reasonable assurance and a review at limited assurance. Check which one your lender or investor asked for.
When did CSRE 2400 take effect?
It applies to reviews of periods ending on or after December 14, 2017.
Can a private company skip the audit?
Under the CBCA, shareholders of a non-distributing corporation can resolve not to appoint an auditor if every shareholder consents. The resolution lasts only until the next annual meeting.
How long should I keep the records the reviewer sees?
The CRA says generally six years from the end of the last tax year they relate to. Some records, like the share register, are kept indefinitely.
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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.