Review report
A review report (beoordelingsverklaring) contains a conclusion from a limited assurance engagement on financial information. The assurance is lower than in an audit.
What does review report mean?
A review report (beoordelingsverklaring) contains a conclusion from a limited assurance engagement on financial information. The assurance is lower than in an audit.
The accountant performs different and less extensive work than in an audit. A review does not replace an auditor's report that is required by law.
How does it work?
A review engagement falls under NBA Standard 2400. The accountant mainly makes inquiries and performs analytical procedures: he discusses the figures with management, compares them with prior years and with expectations, and asks follow-up questions where something does not fit. Work that belongs to an audit, such as attending the inventory count or requesting balance confirmations, is not prescribed. The result is therefore a limited level of assurance.
The conclusion is worded negatively: nothing has come to the accountant's attention that would lead him to believe that the annual accounts do not give a true and fair view. An auditor's report states positively that the annual accounts give a true and fair view. The law nowhere prescribes a review. Where the audit requirement applies, art. 2:393 DCC requires an examination that results in an opinion on true and fair view; a review report does not meet that. A review comes into play when a bank, investor, grant provider or buyer wants more assurance than a compilation report gives.
Example
A BV with € 4 million turnover and a € 2,5 million balance sheet total is small and not subject to the audit requirement. It applies for € 600.000 of credit and the bank asks for a review report. During the analytical procedures the accountant notices that the gross margin rose from 31% to 37% while purchase prices were increasing. Inquiry shows that € 85.000 of December purchase invoices were booked in January. The BV corrects the annual accounts: cost of sales and accounts payable € 85.000 higher, result before tax € 85.000 lower. The accountant then issues a conclusion without qualification.
In the annual accounts
For annual accounts reviewed voluntarily or by contract; not a balance sheet item.
Difference from a compilation report
In a compilation engagement (Standard 4410) the accountant helps prepare the annual accounts and gives no assurance: no opinion and no conclusion. In a review, the board prepares the annual accounts and the accountant tests them, with a limited level of assurance as the result. The auditor's report goes one step further and gives reasonable assurance.
Common mistakes
- Presenting limited assurance as an audit opinion
- Confusing compilation and review
What should you watch for?
- Ask the financier in advance, in writing, which product it requires. Converting a review into an audit afterwards takes extra work, because an audit requires different procedures.
- Read the conclusion itself. A review report can also contain a qualification, an adverse conclusion or a disclaimer.
- Micro and small entities are free to choose between compilation, review and voluntary audit (art. 2:396(7) DCC). For medium-sized and large entities the audit is required by law; a review does not replace it.
Legal basis and source
NBA Standard 2400
Frequently asked questions
Is a review report mandatory for a small BV?
No. Dutch law does not require a small or micro entity to obtain any accountant's report. A review is voluntary or follows from an agreement with, for example, a bank or investor.
How much assurance does a review report give?
A limited level of assurance. That is less than the reasonable assurance of an audit and more than a compilation report, which gives no assurance.
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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