What is the difference between an AUDIT, a REVIEW and a COMPILATION?
When a CPA does an audit, the CPA is giving assurance regarding the financial statements. When doing an audit the CPA performs tests, analysis and other procedures on the the financial information supporting the financial statements. The CPA will also confirm information with third parties such as bank, debtors, lenders etc. The CPA will test the system of internal controls. When a CPA does a review, the CPA asks questions of management regarding the financial statements. Based on management’s responses, the CPA may recommend adjustment be made to the financial statements. The CPA does not perform test or other procedures, such as confirmation with third parties. The CPA analyzes comparative financial statements and makes questions of management when a review is performed. The CPA does not give assurances in a review report. When rendering compilation services, the CPA takes financial information generated by the client put in a financial statement format. The CPA does no audit procedu
