WHAT IS AN AUDIT?
It is the auditor’s responsibility to express an opinion on whether the annual financial statements fairly present the financial position and performance of the entity.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Audits are conducted in accordance with International Standards on Auditing and, in doing so, the auditors are required to comply with ethical requirements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making these assessments, the auditor considers internal control relevant to the preparation and fair presentation of the financial statements.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
WHAT IS AN INDEPENDENT REVIEW?
The procedures performed in a review are substantially less than those performed in an audit. An independent review has a lower level of assurance than an audit.
It is the independent reviewer’s responsibility to express a conclusion on whether anything has come to their attention that causes them to believe that the financial statements do not fairly present, in all material respects, the financial position, and performance of the entity.
A review is conducted in accordance with the International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Financial Statements. This Standard also requires us to comply with relevant ethical requirements.
A review of financial statements in accordance with ISRE 2400 (revised) consists primarily of making inquiries of management and others within the entity involved in financial and accounting matters, applying analytical procedures, and evaluating the sufficiency and appropriateness of evidence obtained. A review also requires performance of additional procedures when the practitioner becomes aware of matters that cause the practitioner to believe the financial statements as a whole may be materially misstated.