Key Differences Between a Financial Audit & Financial Review
A financial audit and review are two different types of financial assessments conducted by professionals to evaluate the accuracy and completeness of financial statements. The main difference between an audit and a review is the level of assurance provided by each assessment.
FINANCIAL AUDIT
A financial audit is a detailed and comprehensive examination of an organization’s financial statements, conducted only by a certified public accountant (CPA). The auditor provides an opinion on whether the financial statements are free from material misstatement, in accordance with generally accepted accounting principles (GAAP). The auditor also assesses the effectiveness of the internal control system of the organization.
FINANCIAL REVIEW
On the other hand, a financial review is a less extensive examination of the financial statements, performed by a CPA or an accountant. The review process involves analytical procedures and inquiries to determine whether the financial statements are plausible and consistent with the information available. However, the level of assurance provided by a review is lower than that of an audit, and the reviewer does not provide an opinion on the financial statements’ accuracy or completeness.
In summary, a financial audit is a more thorough examination that provides a higher level of assurance than a financial review, which provides limited assurance because it’s less extensive.
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