September 5, 2023Dated: | ByManish Kumar Manish Kumar | Corporate Tax | The distinction between an audit and a review is significant. Audit An audit is the most comprehensive form of assurance service, requiring the auditor to express an opinion on a company’s financial statements prepared in accordance with Financial Reporting Standards. Audits are typically mandated by financing, investor, or governmental requirements. During an audit, an independent auditor evaluates a company’s internal accounting system and financial records, issuing a report containing their findings. Review A review is a more limited assurance service, involving the accountant performing analytical procedures on financial statements to gain a general understanding of the company’s finances. The key difference between an audit and a review is that an audit provides more reasonable assurance, while a review does not, and the accountant does not express an opinion. A review may also be required if the company has financing. Audit Vs Review Audits offer the highest level of assurance that a client’s financial statements are free from material misstatements, while reviews provide a limited level of assurance. For both services, the auditor begins with the account balances provided by management. However, an audit involves comprehensive confirmation of this data, while a review consists of minimal testing. Additionally, an audit includes evaluating some of the company’s internal controls, while reviews do not involve any testing. A comprehensive audit requires a substantial amount of time due to the required audit procedures, while reviews require much less time. Auditors typically bill by the hour or the size of the engagement, with audits costing more due to the additional time, procedures, and information required. Conclusion, an audit is a more critical and systematic process than a review, requiring the auditor to have a thorough understanding of the accounting process and internal control system. From a legal standpoint, an audit of business entities is mandatory, while a review is discretionary. To learn more about audits and their importance in the new tax regime in the UAE, please contact us for comprehensive solutions for your accounting, bookkeeping, auditing, taxation, and compliance needs.