Audit, Review, and Compilation. Financial reporting is essential for businesses to ensure transparency, accountability, and compliance with regulatory requirements.
The three primary levels of engagement for financial statements are audit, review, and compilation. Each serves a different purpose and offers varying levels of assurance.
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1. An Audit is the highest level of assurance and involves a thorough examination of a company’s financial statements and underlying records by an independent auditor to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error.
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2. A review provides limited assurance on financial statements and is less extensive than an audit. andto conclude whether anything has come to the reviewer’s attention that would cause them to believe the financial statements are not in accordance with applicable financial reporting frameworks.
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3. A Compilation is the lowest level of engagement involving financial statements. To assist management in presenting financial information in the form of financial statements without providing any assurance. Compilations involve the accountant gathering financial data and presenting it in a standard format.
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