Accounting & Assurance
Audit, review, and compilation are not better and worse versions of the same thing. They are different levels of assurance, and which one you need is almost always decided by somebody else’s requirement.
The Three Levels
The difference is the amount of work a CPA does to stand behind the numbers — and therefore what a third party is entitled to conclude from the report.
No assurance. We assemble your financial statements from information management provides, in the proper format. There is no testing, no confirmation, and no verification work. The report says so explicitly.
Typical trigger: internal reporting, an early-stage business, or a counterparty who needs formal statements without external scrutiny.
Limited assurance. We perform inquiry and analytical procedures sufficient to state whether we are aware of any material modifications needed for the statements to conform with the applicable framework. Substantially less work than an audit.
Typical trigger: a small or mid-size bank loan covenant, a bonding programme, investor updates, or board reporting.
Highest assurance. We test transactions, confirm balances with third parties, evaluate internal control relevant to the engagement, and issue an opinion on whether the statements are presented fairly in all material respects.
Typical trigger: a larger credit facility, investor due diligence, a sale process, or a regulatory, grant, or plan requirement.
A Decision You Face
Owners usually arrive asking which level they should buy. That is the wrong end of the question. Almost nobody purchases assurance because they want it — they purchase it because a document somewhere specifies it. Find the document first.
Ask your lender before you commission anything. We have seen owners buy an audit to satisfy a covenant that specified a review. The gap between the two is a substantial fee difference and several weeks of your team’s time, spent for nothing.
An audit is not just more expensive — it is more intrusive. Confirmations go out to your bank, your customers, and your lenders. We will ask for documentation your team has to find. Plan for the internal hours, not only the invoice.
The cheapest way through any of the three is to have books that were closed properly all year. Assurance on records we already maintain moves faster than assurance on records assembled retroactively, because the reconciliations and schedules already exist in the form the engagement needs.
Also Offered
Where a third party wants specific procedures performed on specific items rather than an opinion on the whole. We carry out the procedures the parties agree in advance and report findings without a conclusion. Common in transactions, earn-out verification, royalty and franchise compliance, and covenant testing.
Plan audits under ERISA, including the full-scope and limited-scope distinction and the participant-count threshold that pulls a plan into the requirement in the first place. A specialised area with its own peer-review scrutiny — plans are audited on a different standard from the sponsor’s own financials.
Peer review: most recent report
Who Runs This
Questions about anything on this page go straight to the person who runs this work — not a contact form queue.
Christopher Nowak, CPA
Manager, Assurance
[email protected]