What are Audits and Which one do I Need?

An audit provides the highest level of assurance of financial reporting, and is a fair and true record of the financial position, cash flow, and operating results. But it’s not the auditor’s job to investigate every single transaction in the financials, to uncover every sign of an error, or perhaps a fraud. Basically, auditors select a random sample of transactions and follow the trail to ensure that the processes have been followed, and it all looks above board. They can only review the information the organisation provides. So what information does your auditor ask for, or receive? You want to make sure they receive as much detail as possible, so nothing can be missed or hidden. The more detailed investigation of your financials is called a forensic audit, which some use if they’ve got concerns about inappropriate transactions, or fraud.

Review is the second control process which provides limited assurance of financial records, but it does not provide the same degree of evidence produced with a full audit.

Thirdly, a compilation provides no assurance of financial records and consists only of a financial statement, with no testing or assurance as to the validity of those statements.