When it comes to assessing the financial health of a business, understanding the difference between audit and review engagements is essential. These terms—often used interchangeably—actually represent two distinct levels of assurance and scrutiny in accounting. Whether you’re a business owner, nonprofit leader, or stakeholder evaluating financial integrity, choosing between an accounting review and a full audit can significantly impact your operations, compliance, and transparency.

What is an Audit Engagement?

An audit engagement is the highest level of financial assurance. It involves an in-depth examination of a company’s financial statements and internal controls by an independent CPA. The goal is to express an opinion on whether the financial statements are presented fairly in all material respects.

Why Are Audits Required?

Audits are typically required by lenders, investors, and regulatory bodies. They offer credibility, enhance stakeholder trust, and serve as a tool for uncovering inefficiencies or potential fraud.

What is a Review Engagement?

A review engagement offers limited assurance and is less detailed than an audit. It includes analytical procedures and inquiries but does not require the auditor to test internal controls or verify financial transactions.

The Purpose of a Review

A review is ideal for small to medium-sized businesses where stakeholders need some level of assurance without the costs and demands of a full audit. It’s a smart solution when a financial review vs. audit cost comparison favors efficiency.

Review Engagement vs Agreed-Upon Procedures

While both are less extensive than audits, review engagements vs agreed-upon procedures differ in scope and purpose. A review provides limited assurance across the full financials, whereas agreed-upon procedures target specific areas and do not result in an opinion on the financial statements.

Choosing Between Audit and Review

So, how do you decide between an audit vs. review engagement? Consider:

• Business Needs: Larger organizations with regulatory oversight often require audits. Smaller businesses may opt for a review.
• Stakeholder Expectations: Ask yourself—who is using the report, and why?
• Resources: Reviews are less costly and time-consuming.
• Future Planning: Will your business need audited statements to meet future growth or financing goals?

Leveraging These Engagements for Growth

Whether it’s an audit or a financial review, each engagement can provide more than just compliance. They help businesses:

• Identify internal inefficiencies and improve operations
• Strengthen financial governance
• Boost confidence with current and future stakeholders

The Continuous Financial Journey

Understanding the difference between audit and review engagements is critical to informed decision-making. By choosing the right level of assurance, businesses can align financial strategy with compliance needs and long-term goals.

At Holbrook & Manter, our A&A professionals offer expertise in accounting reviews, audits, and agreed-upon procedures. Whether you need help determining the best fit or preparing for your next engagement, we’re here to guide you.

Contact Holbrook & Manter to learn how our tailored audit and review solutions can support your organization’s success.