Some companies prefer using the term’review’ when they’re actually talking about an audit. And that’s because the term audit scares them to the bone. That’s not to say the two terms, audit and review, are one and the same. They can’t be used interchangeably.
Audit vs Review
Audit means a systematic examination of financial statements and accounting records to make sure there are no errors or chances of fraudulent activities
- Review is simply an evaluation of financial records to check if there is chance for modification
- The main difference between audit and review is that audit means a very careful and systematic examination, while review is just an evaluation
Can auditors prepare financial statements?
An audit is a process in which a certified public accountant examines the financial statements of a company
Level of Assurance
Lower for a review
- Higher for an audit
- Reliance on Management
- Work Performed
- Price
- Report Provided
- Opinions are expressed, but in a positive form, e.g. these financial statements are completely free of material misstatement.
Auditing is an examination of a business done by an auditor through on-site inspection to verify if the process or quality system is adhering to the standards and requirements
The primary audits are of three types:
- Financial audit, Operational audit and Compliance audit.
What is an Audit?
An audit provides more reasonable assurance
- It’s meant to show that a financial statement is free of material misstatement and that it’s been prepared in accordance with the accounting standards installed in place
- The audit strives to corroborate the disclosures and amounts in financial statements by obtaining analytical procedures, audit evidence, observations, conformations, etc.
What is an audit review report?
An audit is a detailed examination of the financial, operational, and compliance information of an organization.
What triggers tax audits?
When you earn a lot of money, consider it a tax audit trigger
- If you are claiming itemized deductions that are disproportionate to your income
- Own a cash business
- Being self-employed
- Failed to report taxes
- Show losses in your business for 3 consecutive years
- Claim your vehicle as 100% business use
- Have assets or cash in another country
What is a Review?
A review looks for potential accounting errors
- It does not provide a reasonable amount of assurance. It instead offers limited assurance by looking at the plausibility of a financial statement.
- Compared to an audit, a review involves less detail and requires less investigation.
Detailed Procedure
An audit has a detailed and preset procedure to follow, of which financial statements play a key role in determining the financial position of the underlying entity in all fairness
