Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Different levels of assurance
The core difference is the level of assurance. An audit provides reasonable (positive) assurance — the auditor does enough testing to positively state that the accounts give a true and fair view. A review provides only limited (negative) assurance — the practitioner states that nothing came to their attention suggesting the accounts are misstated.
Different procedures
An audit involves substantive testing, verification, confirmations and sampling of transactions and balances. A review relies mainly on inquiry of management and analytical procedures (ratios, trends), with little or no detailed testing. Consequently an audit is more thorough, takes longer and costs more; a review is quicker and lighter. The right one depends on what users need.
A worked example
Example: a company’s lenders require an audit for full assurance on the year-end accounts, while the same company might commission a limited review of its half-year numbers for an internal or investor update — faster and adequate for that purpose. Listed companies often have quarterly reviews and an annual audit. Choosing the right engagement saves cost without over- or under-assuring. Our team can advise and perform either.