Audit and Review are processes used to assess financial information, but they differ in scope and depth. An Audit is a thorough examination of a company's financial statements and records to ensure accuracy, compliance with accounting standards, and detect any misstatements or fraud, often requiring detailed testing and verification. A Review, on the other hand, is a less intensive process that involves analyzing financial statements and making inquiries to provide limited assurance about their reliability, without the depth of an audit.

What is an Audit?

An audit is a thorough and systematic examination of an organization's financial records, processes, and controls. Its primary aim is to provide an opinion on whether the financial statements present a true and fair view of the organization's financial performance and position. Audits are typically mandatory for public companies and are conducted by external, independent auditors.

Examples of Audits:

1. An annual audit of a publicly traded company to verify financial statements for investors.
2. A compliance audit to ensure adherence to laws and regulations in a financial institution.
3. An operational audit to evaluate the efficiency and effectiveness of operations in a manufacturing plant.

What is a Review?

A review is less comprehensive than an audit and involves analytical procedures and inquiries to ascertain the plausibility of financial information. A review does not require tests of controls or verification of data, and thus provides a lower level of assurance compared to an audit. Reviews are often used for interim financial statements or by smaller firms not required to conduct full audits.

Examples of Reviews:

1. A quarterly review of financial statements in a small to medium-sized enterprise to assess financial trends.
2. A review of financial forecasts or projections to support a business loan application.
3. A review of a non-profit’s financial statements before submission to donors or grant providers.

Difference Between Audit and Review

Basis	Audit	Review
Purpose	To express an opinion on the truth and fairness of financial statements.	To ascertain the plausibility of financial information.
Scope	Comprehensive examination including verification of assets, liabilities, and transactions.	Limited to analytical procedures and inquiries.
Assurance Level	Provides a high level of assurance.	Provides a limited level of assurance.
Required Expertise	Conducted by certified auditors.	Can be conducted by accountants, not necessarily auditors.
Regulatory Requirement	Mandatory for public companies and certain private entities.	Optional or required by internal policies, not typically mandated by law.
Outcome	Auditor's report expressing an opinion on financial statements.	Review report that may suggest but does not guarantee financial statement accuracy.
Duration and Cost	Time-consuming and more expensive due to its depth and thoroughness.	Less time-consuming and costly compared to an audit.
Examples	Auditing a corporation to assure investors of financial status.	Reviewing a small business’s financials for a credit line approval.