2.5 Differences between audit and review engagements

Audit and review engagements are both types of assurance engagements performed by an independent auditor or assurance provider. However, there are some key differences between the two:

• Objectives: The objective of an audit is to express an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with an applicable financial reporting framework. The objective of a review is to provide limited assurance that there are no material modifications that need to be made to the financial statements in order for them to be in accordance with the relevant financial reporting framework.
• Scope of work: An audit involves a thorough examination of the financial information being reported, including the entity’s internal controls and transactions. A review, on the other hand, only involves a limited examination of the financial information and relies heavily on management’s representations.
• Evidence gathering: An audit involves the gathering of a significant amount of evidence to support the auditor’s conclusions. A review involves a more limited examination of evidence
• Conclusions and opinions: An audit results in the auditor expressing an opinion on the financial statements as a whole. A review results in the auditor providing limited assurance that there are no material modifications that need to be made to the financial statements.
• Cost: An audit is typically more expensive compared to a review because of the broader scope of work and the level of evidence gathering involved.