What is the difference between an audit, review, and compilation?
The key difference between an audit, review, and compilation is the level of assurance it provides.
- An audit provides the highest level of assurance that the financial statements are free from material misstatement and are fairly presented in accordance with the applicable financial reporting framework.
- A review provides limited assurance, based on primarily analytical procedures and management inquiries that no material modifications to the financial statements are required.
- A compilation provides no level of assurance because the financial report is based on the representations made by management and not verified by the accountant.