The clean answer
Do not guess based on price or urgency. The lender's written request should be read literally because each engagement produces a different report and assurance level.
If the request says audit, a compilation is not a cheaper version of the same service. If it asks for a CPA letter, borrowing-base schedule, covenant calculation, or specific testing, agreed-upon procedures may be a better fit than full financial statement assurance.
How to read the request
- Audited financial statements generally require an audit opinion and more extensive procedures.
- Reviewed financial statements provide limited assurance using inquiry and analytical procedures.
- Compiled financial statements present financial information without assurance.
- Agreed-upon procedures report specific findings for users who agree on the procedures.
What to send before scoping
- The lender request, covenant language, term sheet, or investor letter.
- Current and prior-year financial statements, trial balance, and general ledger.
- Debt schedules, bank reconciliations, revenue detail, major contracts, and supporting schedules.
- Deadline, intended users, and whether comparative or interim periods are required.