What is the difference between a compilation engagement, a review engagement and an audit? First, the compilation engagement does not provide any assurance on the financial statements. The data from the accounting system are compiled and presented in the form of a current financial statement, but no labor certification is not provided in respect of the amounts. The financial statements compiled do not have to conform to a recognized accounting standards such as Accounting Standards for Private Enterprises (ASPE).
The review engagement and audit are two types of report in which insurance is provided and which must comply with a recognized accounting standards, the most common being ASPE Quebec. In a review engagement, the auditor issues a negative opinion, in which he says that nothing suggests that the financial statements do not conform to GAAP. The methods used by the accountant are inquiries, analytical procedures and interviews on the information provided by the Company.
The audit in turn is based on substantive procedures established by the audit risks identified by the auditor and it provides reasonable assurance that the financial statements are free of material misstatement. The Company management has responsibilities to the information provided and the auditor shall, among others, obtaining an understanding of internal controls in place and validating the accounting policies used and the accounting estimates made by management.
The type of mission is based on the users of financial statements: to whom do they serve? Some users like the creditors may demand information that has been reviewed or audited same. By cons, if the financial statements do not have to be used for general use, a compilation engagement may be sufficient.
Feel free to contact us and we will help you determine what mission is best for your needs.