What is the difference between a Compilation, Review, and Audit?

Many times board members, lenders, and ministers have made requests that their organization obtain financial statement services from CPA firms. The services most commonly requested are as follows:

Compilation – A compilation is the compiling of numbers creating financial statements. No attestation procedures procedures are performed. A compilation is limited to presenting in the form of financial statements information that is the representation of management. No opinion or any other form of assurance regarding the accuracy of the information is rendered.

Review – A review consists principally of inquiries of management and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. However, we make a statement that we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Therefore, limited assurance to the accuracy of the financial statements is provided.

Audit – An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

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