Switching From a Review Engagement to an Audit
Recently, the framework of standards on auditing and guidance notes on related services are issued, wherein a divergence between audit and related services is clarified. Related services include reviews, agreed upon procedures, compilation. The review is often assorted with inspect, but they are dissimilar in the sense that an audit is a thorough test of the fiscal data of an organisation, to give his/her stance on the same.
On the other hand, the review can be understood equally the formal assessment of the fiscal statement, to introduce change, if any. This article presents you all the substantial differences betwixt audit and review in a detailed manner.
Content: Audit Vs Review
- Comparison Nautical chart
- Definition
- Central Differences
- Conclusion
Comparison Chart
| Basis for Comparison | Audit | Review |
|---|---|---|
| Pregnant | An audit refers to the systematic and intelligent exam of the books of accounts of an entity to cheque whether they present truthful and fair view or not. | A review refers to an evaluation of the financial books, conducted past the accountant, to determine if there are any chances of modifications or not. |
| Assurance level | Reasonable level of assurance | Moderate level of assurance |
| Report provided | Positive Assurance Assertion | Negative Balls Exclamation |
| Cost | High | Insufficiently low |
Definition of Audit
The audit is divers as an unbiased and objective examination of the fiscal statements, records, concrete inventory, operations, performances etc. of an organization, irrespective of its size, nature and legal construction, with the aim of expressing the opinion on the fiscal statements through an audit written report.
The auditor analyses whether the reports prepared by the entity conforms to the fiscal reporting framework, i.e. GAAP or IFRS. The two basic objectives of an auditor are principal objective and secondary objective, wherein the chief objective is to determine whether the financial statement represents true and off-white view and the secondary objective is to observe if in that location are any errors or frauds, in the financial accounts of the client.
There tin can be two types of audits: Internal inspect and external audit, wherein the internal audit is performed by the employees of the organization, whereas the external auditor undertakes the external inspect.
Definition of Review
The review is defined as an evaluation of financial data, in which limited assurance is given by the auditor.
In a review of the financial statement, the accountant is required to undertake the process that is important to give a proper base of operations for obtaining moderate assurance, in essence, no relevant changes are necessary to be fabricated in the financial statements of the company to conform to the financial reporting framework. In effectively terms, it states that the financial statements are free from material misstatement, which is expressed every bit negative assurance.
To conduct a review, the accountant is not required to have a complete cognition of internal control organization of the company and also know nigh the inspect procedures. Further, review engagement relies on the analytical procedure and inquiries carried out past the accountant.
Key Differences Between Audit and Review
The following points are noteworthy so far as the divergence between inspect and review is concerned:
- A review tin be understood as an official assessment of the business relationship books, and then as to identify whether changes are to be implemented if required. As confronting, an inspect implies an contained disquisitional examination of the books of accounts of the entity, so as to requite the opinion/judgement on the footing of evidence or facts.
- An audit performed by an auditor provides loftier simply not absolute balls that the books of accounts to exist audited is gratis from whatsoever pertinent misstatement. On the other hand, a review undertaken by an auditor, provides a moderate level of assurance, that the information then reviewed, is free from whatsoever material misstatement.
- In the audit, the opinion of the auditor is given as positive assurance assertion, in an audit report. Conversely, in a review, the auditor's stance is expressed every bit negative balls assertion, in the study provided.
- When it comes to toll, the review is an expensive procedure as compared to the compilation, whereas, the inspect is more expensive than a review.
Conclusion
To sum up the discussion, it can exist said that an inspect is a more critical and systematic procedure equally compared to a review. In an audit, the accountant should have full-fledged knowledge of the bookkeeping process and the internal control system. Farther, from a legal bespeak of view, an audit of the business organisation entities is mandatory, simply review is discretionary.
Source: https://keydifferences.com/difference-between-audit-and-review.html
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